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, 

et al.,

Debtors. 1

In re:

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO 

RICO,

as representative of

THE EMPLOYMENT RETIREMENT SYSTEM 

OF THE COMMONWEALTH OF PUERTO 

RICO (“ERS”),

Debtor.

PROMESA

Title III

No. 17 BK 03283-LTS

(Jointly Administered)

PROMESA

Title III

No. 17 BK 03566-LTS

MOTION FOR RECONSIDERATION UNDER BANKRUPTCY RULE 9023

1 The Debtors in these Title III cases, along with each Debtor’s respective Title III case number and the last four (4) digits of each Debtor’s 

federal tax identification number, as applicable, are the (i) Commonwealth of Puerto Rico (Bankruptcy Case No. 17-BK-3283 (LTS)) (Last 

Four Digits of Federal Tax ID: 3481); (ii) Employees Retirement System of the Government of the Commonwealth of Puerto Rico (“ERS”) 

(Bankruptcy Case No. 17-BK-3566 (LTS)) (Last Four Digits of Federal Tax ID: 9686); (iii) Puerto Rico Highways and Transportation 

Authority (Bankruptcy Case No. 17-BK-3567 (LTS)) (Last Four Digits of Federal Tax ID: 3808); (iv) Puerto Rico Sales Tax Financing 

Corporation (Bankruptcy Case No. 17-BK-3284 (LTS)) (Last Four Digits of Federal Tax ID: 8474); and (v) Puerto Rico Electric Power 

Authority (Bankruptcy Case No. 17-BK-4780 (LTS)) (Last Four Digits of Federal Tax ID: 3747) (Title III case numbers are listed as 

bankruptcy case numbers due to software limitations). 

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TO THE HONORABLE COURT:

Individual Plaintiffs, the Estate of Pedro José Nazario Serrano; the Estate of Juanita Sosa 

Pérez2; Joel Rivera Morales; María de Lourdes Gómez Pérez; Héctor Cruz Villanueva; Lourdes 

Rodríguez and Luis M. Jordán Rivera, all of them Retirees/Beneficiaries of the ERS and Plaintiffs 

in a claim for damages described below (the “Commonwealth Action”) that is currently pending 

in the Commonwealth of Puerto Rico Court of First Instance, San Juan Part with number K 

AC2011-1067 (the “Commonwealth Court”), without submitting to the jurisdiction of this Court, 

very respectfully STATE and PRAY as follows:

I. INTRODUCTION

The individual Plaintiffs and Beneficiaries, in the Commonwealth Action, hereby 

respectfully request reconsideration of this Court’s MEMORANDUM OPINION AND ORDER 

GRANTING THE MOTION TO ENFORCE THE PLAN (hereinafter the “MEMORANDUM OPINION AND 

ORDER” [Docket No. 22927], on the grounds that it constitutes a judicial taking of their individual 

causes of action for damages without compensation, and thus, violates due process.

While it can be argued that the ERS receives some benefit from the Plan of Adjustment 

(hereinafter the “POA”), the MEMORANDUM OPINION AND ORDER has the effect of depriving the 

individual Plaintiffs Retirees of their causes of action for damages that have been recognized, not 

only by law, but by judicial precedents, which are final and binding. 

On November 29, 2022, in its MEMORANDUM OPINION AND ORDER, the Court concluded 

that: “[T]he ERS Beneficiaries are hereby enjoined from prosecuting the Commonwealth Action 

insofar as the ERS Beneficiaries assert claims against UBS that are based in any way on its 

business dealings with the ERS.”

2Pedro José Nazario and Juanita Sosa Pérez are deceased. Once their respective declaration of heirs is available, we will 

make the substitution. 

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There are various reasons why this Honorable Court should reconsider its decision

including the following, without limitation: (1) as will be explained hereinafter, under Article 

1802 of the Puerto Rico Civil Code, the ERS Beneficiaries have a clear cause of action against UBS 

for the damages they suffered as a result of the UBS conduct, even if there is no contractual 

relationship between UBS and the ERS Beneficiaries or if the damages suffered by the ERS 

Beneficiaries derive from damages caused by UBS to the ERS; (2) the debtors in the Title III case 

in question do not include UBS, and any resolution of the Commonwealth Action in favor of the 

ERS Beneficiaries would in no way alter debtors’ rights, liabilities, options or freedom of action, 

or otherwise have an impact under the handling and administration of the Bankruptcy estate; 

(3) under Article 1802 of the Puerto Rico Civil Code, the ERS Beneficiaries, as individual 

plaintiffs, are clearly entitled to recover from UBS (who is not a debtor in the Title III cases) all 

damages caused to them by the conduct of UBS, including the difference between their original 

ERS pension benefits and the reduced pension benefits provided by the Plan. The amount of said 

difference should be determined by the Commonwealth Court in the Commonwealth Action, and 

the ERS Beneficiaries have a clear right to claim it under Article 1802 of the Puerto Rico Civil 

Code; (4) under Article 1802 of the Puerto Rico Civil Code, no direct contact between UBS and 

the ERS Beneficiaries, individually, is required for the ERS Beneficiaries to have a valid cause of 

action against UBS if, as alleged in the Commonwealth Action, the UBS conduct caused damages, 

directly or indirectly, to the ERS Beneficiaries; (5) the confirmation and consummation of the 

POA may protect some (but not all) of the ERS Beneficiaries’ original pension benefits, but said 

possible protection does not preclude the ERS Beneficiaries from claiming their net losses 

pursuant to the Commonwealth Action; (6) in the Commonwealth Action, the ERS Beneficiaries 

do not seek to recover assets that, under the confirmed POA, neither belong to ERS nor are 

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resources designated to cover ERS’s former obligations to the ERS Beneficiaries, and the claims 

by the Avoidance Active Trustees against UBS in the Second Amended Complaint of September 

15, 2022, are only to recover fees charged by UBS and include no claims for other damages 

inflicted by UBS to the ERS Beneficiaries caused by UBS, directly or indirectly. 

II. ARGUMENT

The ERS Individual Plaintiff’s Commonwealth Action is based on Article 1802 of the 

Puerto Rico Civil Code of 1930, as amended, P.R. Laws Ann. tit. 31, § 5141. In Puerto Rico, said 

article serves as the legal basis to determine if the actor of certain conduct that causes damages 

is responsible for extra-contractual civil liability. It establishes that: “A person who by act or 

omission causes damage to another through fault or negligence shall be obliged to repair the 

damage so done.” P.R. Laws Ann. tit. 31, § 5141. It further provides that “[c]oncurrent 

imprudence of the party aggrieved does not exempt from liability, but entails a reduction of the 

indemnity." Id.

To that end, the Supreme Court of Puerto Rico has held that for a cause of action to 

prosper under Art. 1802, supra, three elements must be present, namely: (1) a culpable or 

negligent act or omission; (2) causal relationship between the culpable or negligent act or 

omission and the damage being claimed, and (3) an actual damage. Nieves Diaz v. González 

Massas, 178 DPR 820, 843 (2010); López v. Porrata Doria, 169 DPR 135, 150 (2006). No 

contractual relationship between plaintiffs and defendants is required for a valid cause of action 

to exist under Article 1802.

As for the first element, the Supreme Court of Puerto Rico has established that "the 

concept of fault... is as infinitely broad as the conduct of human beings and includes any fault of 

a person that produces harm or damages." Lopez v. Porrata Doria, supra, p. 150. Likewise, the 

Supreme Court of Puerto Rico has held that the concepts of fault and negligence are equivalent 

to non-compliance with the duty of care. Which in turn concerns, in essence, not anticipating or 

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foreseeing the likely consequences of acts, which would have been foreseen by a prudent and 

reasonable person. Nieves Diaz v. González Massas, supra, p. 844; Lopez v. Porrata Doria, supra, 

p. 151; Valle v. E.L.A., 157 DPR 1, 18 (2002); Ramos vs. Carlo, 85 DPR 353, 358 (1962). The 

foregoing does not require precisely imagining the universality of consequences that may arise 

from a certain conduct. Pons v. Engebretson, 160 DPR 347, 355 (2003). “The essential thing is 

that there is a duty to foresee, in a general way, the consequences of a certain class." Id. For such 

purposes, the Supreme Court of Puerto Rico has resorted to the figure of the good father of the 

family, or the prudent and reasonable person, for purposes of determining how a person of 

normal or ordinary diligence should act, by virtue of particular circumstances. Nieves Diaz v. 

González Massas, supra, p. 844; Lopez v. Porrata Doria, supra, pp. 150-151. Therefore, if the 

damage caused was foreseeable, there will be liability; if it was not, it will be considered a 

fortuitous event. Pons v. Engebretson, supra. The Supreme Court of Puerto Rico has also 

indicated that the duty of care and to foresee possible damages does not extend to any 

imaginable danger that could cause damage, but rather must be based on probabilities, not mere 

possibilities. Lopez v. Porrata Doria, supra, pp. 164-165.

On the other hand, the second element requires that there be a causal link between the 

damage caused and the culpable or negligent act or omission, that is, adequate cause. The theory 

of adequate cause provides that “not every condition without which the result would not have 

been produced is a cause, but the one that ordinarily produces it according to general 

experience." Colon Santos v. Coop. Sec. Mult. PR, 173 DPR 170, 186 (2008). That is, “damage may 

be considered the probable and natural result of a negligent act or omission if after the event, in 

retrospect, the damage appears to be the reasonable and common consequence of the act or 

omission." Pons v. Engebretson, supra, pp. 355-356; Hernández Vélez v. Televicentro, 168 DPR 

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803, 815 (2006). To that effect, the Supreme Court of Puerto Rico has held that “[t]he doctrine of 

adequate causality requires indices or criteria based on experience and knowledge of causes and 

effects to give it content." Lopez v. Porrata Doria, supra, pp. 166-67.

Lastly, for a cause of action under Article 1802, supra, to prosper in our legal system, it is 

necessary that a damage occurs. This, for non-contractual purposes, refers to “any material or 

moral impairment caused in contravention of a legal norm, suffered by one person and for which 

another has to respond." J. Puig Brutau, Fundamentals of Civil Law, Barcelona, Ed. Bosch, 1983, 

T. 2, Vol. 3, p. 92. See also Sagardía De Jesús v. Hospital Aux. Mutuo, 177 DPR 484, 505 (2009). In 

the absence of a damage, there is no obligation to indemnify. Lopez v. Porrata Doria, supra, p. 

151.

UBS, in its capacity as financial consultant and investment adviser, had the obligation and 

fiduciary duty to alert the members of the System's Board of Trustees about the risks inherent 

in the issuance and proposed use of the proceeds of the 2008 POB’s. By failing to do so, UBS 

breached that duty. Said conduct not only harmed the ERS itself, but inflicted foreseeable 

damages upon the ERS beneficiaries for which they have not been compensated. Such 

damages consist inter alia of the ERS Individual Plaintiffs losing part of their pensions, including 

cost of living adjustments, higher age criteria to qualify for pensions, loss of their marginal 

benefit to take loans originated by the ERS, as well as mental anguish and suffering. 

If as UBS claims, the individual Plaintiffs cannot prove the damages suffered by 

them and the causal relationship between those damages and UBS’s errors, omissions, 

fault, or negligence, that is something for the Commonwealth Court to decide after the 

Individual Plaintiffs have had their day in court. In other words, UBS cannot shield itself 

from liability towards the individual Plaintiffs by simply arguing that it must defend itself 

in another case, against other parties, and in another jurisdiction, in which the damages 

are claimed by another party.

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Lastly, it cannot be ignored, that on August 30, 2013, the Commonwealth Court of 

Appeals, at Pedro José Nazario v. UBS, KLAN201300738, ruled that the ERS Individual Plaintiffs 

have legal standing to prosecute the Commonwealth Action pro se. While doing so, the Court of 

Appeals referred to the ERS Individual Plaintiffs as the "people of flesh and bones who directly 

hold the right they claim.”

Moreover, pursuant to the Second Amended Complaint filed by the Avoidance Actions 

Trustee on September 15, 2022 [Docket No. 49] against the UBS Defendants, the Complaint solely 

request disgorgement of underwriting fees. (Second Amended Complaint, ¶’s 216 through 223). 

There is absolutely no claim in the Second Amended Complaint for damages against the UBS 

Defendants in connection with UBS’s recommendation to issue the ERS Bonds.

For this Court to deprive the ERS Beneficiaries of their individual claims against UBS 

(who is not a debtor in the Title III case) pursuant to the Commonwealth Action constitutes a

“judicial taking” without just compensation, which is prohibited by the United States 

Constitution, as stated by the United States Supreme Court in Stop the Beach Renourishment v. 

Florida Department of Environmental Protecion, 130 S.Ct. 2592 (2010), and deprives the ERS 

Beneficiaries of property without due process of law, which is also prohibited by the United 

States Constitution.

A judicial taking occurs when “cases involve a judicial decision holding that a property 

right previously possessed by a private property owner is now to be taken from the owner in 

order to serve some public end.” See, Eduardo Peñalver & Lior Strahilevitz, "Judicial Takings or 

Due Process?" (John M. Olin Program in Law and Economics Working Paper No. 549, 2011, p. 45) 

available at http://papers.ssrn.com/sol3/ papers.cfm?abstract_id=1791849. When these types 

of cases are resolved “the judiciary would have been knowingly abrogating a private property 

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interest in order to serve the public interest.” Id. In cases where judicial takings are involved, the 

courts “take private property for public use, literally redefining private property as state 

property.” without due process of law. Id.

In the present case, the ERS Individual Plaintiffs, in their individual and personal 

capacities, have a direct tort action against UBS in the Commonwealth Action, which this 

Honorable Court by way of its opinion and order is taking away from them, without just 

compensation and without the opportunity to be heard by the Court with jurisdiction. It is 

important to note that the Plan of Adjustment does not compensate the ERS Individual Plaintiffs

in any way for the damages they suffered, caused by UBS’ negligent conduct and/or professional 

malpractice. 

THEREFORE, the ERS Individual Plaintiffs respectfully request this Honorable Court to

reconsider its MEMORANDUM OPINION AND ORDER [Docket No. 22927]; and, instead, enter an 

order denying UBS’ Motion to Enforce the Plan of Adjustment. 

RESPECTFULLY SUBMITTED.

WE HEREBY CERTIFY: That on this same date a true and exact copy of this motion was 

filed with the Clerk of Court using CM/ECF system, which will notify a copy to counsel of record. 

[DATE AND SIGNATURES IN THE NEXT PAGE]

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In San Juan, Puerto Rico, this 13 day of December 2022.

VICENTE & CUEBAS PUJOL LAW OFFICES, PSC

P.O. Box 11609 P.O. Box 363042

San Juan, PR 00910-1609 San Juan, PR 00936-3042

Phone No. (787) 751-8000 Phone No. (787) 724-0900

Fax No. (787) 756-5250 Fax No. (787) 724-1196

/s/Harold D. Vicente /s/Francisco Pujol Meneses 

Harold D. Vicente Francisco Pujol Meneses

USDC-PR Bar No. 117711 USDC-PR Bar No. 212706

hvicente@vclawpr.com fpujol@pujollawpr.com

/s/Harold D. Vicente-Colón BUFETE ANDRÉU & SAGARDÍA

Harold D. Vicente-Colón 261 Avenida Domenech

USDC-PR Bar No. 211805 San Juan, Puerto Rico 009718

hdvc@vclawpr.com Phone No. (787) 754-1777/763-8044

Fax No. (787) 763-8045

 

 /s/José A. Andréu Fuentes

 José A. Andréu-Fuentes 

USDC-PR Bar No. 204409

 jaf@andreu-sagardia.com

Counsel for Individual Plaintiffs, Beneficiaries of the Retirement System

of the Commonwealth of Puerto Rico

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