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

PROMESA

Title III

No. 17 BK 3283-LTS

(Jointly Administered)

Re: ECF Nos. 185, 1881, 1885, 

1933 and 2196.

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

This Response relates only to

the Commonwealth and shall

only be filed in the lead Case No. 

17 BK 3283-LTS.

COMMONWEALTH 

OF PUERTO RICO’S MOTION TO DISMISS

OBJECTION FILED BY JAVIER MANDRY MERCADO 

TO MOTION FOR AN ORDER AUTHORIZING ASSUMPTION 

OF AGREEMENT WITH EDUARDO MANDRY MERCADO AND LUCÍA 

CASAS CASAL PURSUANT TO BANKRUPTCY CODE SECTION 365 (DOCKET 1881)

To the Honorable United States District Court Judge Laura Taylor Swain:

The Commonwealth of Puerto Rico (the “Commonwealth”), as a Title III debtor, by and 

through the Financial Oversight and Management Board for Puerto Rico, as the Debtors’ 

 

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) Puerto Rico 

Sales Tax Financing Corporation (“COFINA”) (Bankruptcy Case No. 17 BK 3284-LTS) (Last Four Digits of 

Federal Tax ID: 8474); (iii) Puerto Rico Highways and Transportation Authority (“HTA”) (Bankruptcy Case 

No. 17 BK 3567-LTS) (Last Four Digits of Federal Tax ID: 3808); (iv) 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); and (v) Puerto Rico Electric Power Authority (“PREPA”) (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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representative pursuant to section 315(b) of the Puerto Rico Oversight, Management, and 

Economic Stability Act (“PROMESA”),2respectfully submits this motion (the “Motion”) to seek 

dismissal of the Motion in Opposition to Petition (Docket 1881) and in Response to Order 

(Docket 1885) [ECF No. 1933] (the “Opposition”) and the Reply to ‘Response to Commonwealth

of Puerto Rico’s Response to Opposition filed by Javier Mandry Mercado to Motion for an 

Order Authorizing Assumption of Agreement with Eduardo Mandry Mercado and Lucia Casa 

Casal Pursuant to Bankruptcy Code Section 365’ (Docket 1991) [ECF No. 2196] (the “Reply”)

filed by Javier Mandry Mercado (the “Objector”). In support of this request, the Commonwealth

respectfully represents as follows:

I. DISCUSSION

1. On November 29, 2017, the Commonwealth filed the Commonwealth of Puerto 

Rico’s Motion for an Order Authorizing Assumption of Agreement with Eduardo José Mandry 

Mercado and Lucía Casas Casal Pursuant to Bankruptcy Code Section 365 [ECF No. 1881] (the 

“Assumption Motion”), requesting approval from the United States District Court for the District 

of Puerto Rico (the “Court”) for its proposed assumption of a certain Assignment of Usufruct 

Agreement dated August 11, 2016 (the “Agreement”) entered by and between Eduardo José 

Mandry Mercado and Lucía Casas Casal (the “Landlords”), and the Puerto Rico Police 

Department (“PRPD”). The Agreement grants PRPD the right to use an area of .43892 cuerdas

(acres) (the “Premises”), for a $1 annual fee until April 1, 2021. The Agreement was entered

into as a result of a previous settlement agreement entered into with the Puerto Rico Court of 

First Instance’s approval in the case of Estado Libre Asociado de Puerto Rico v. Mango S.E., 

Eduardo José Mandry Mercado v. Municipio Autónomo de Ponce, Finca Matilde, Inc., Civil 

 

2

PROMESA is codified at 48 U.S.C. §§ 2101-2241.

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Num. J DP2006-0598. As of the date of the filing of this Motion, the only other parties to the 

Agreement, the Landlords, have not opposed the Commonwealth’s request to assume the 

Agreement.

2. Objector, a non-party to the Agreement, argues that he could potentially have a

property interest over the Premises if he is successful in annulling several unspecified 

agreements (some of them entered by his parents while he was a minor in 1982) via separate 

actions and therefore, he has standing to annul the Agreement and reject the Commonwealth’s 

request to assume the Agreement. 

3. Objector’s objection should be dismissed without a hearing for the following 

reasons:

a. Objector lacks standing

4. “[T]he question of standing is whether the litigant is entitled to have the court 

decide the merits of the dispute or of particular issues.” Warth v. Seldin, 422 U.S. 490, 498 

(1975). “If a party lacks . . . standing to bring a matter before the court, the court lacks subject 

matter jurisdiction to decide the merits of the underlying case.” Dubois v. U.S. Dept. of 

Agriculture, 102 F.3d 1273, 1281 (1st Cir. 1996). “The standing inquiry is both plaintiff-specific 

and claim-specific.” Pagán v. Calderón, 448 F.3d 16, 26 (1st Cir. 2006). Thus, when presented 

with a standing challenge, “a reviewing court must determine whether each particular plaintiff is 

entitled to have a federal court adjudicate each particular claim that he asserts.” Id.

5. The term “standing” has both constitutional and prudential requirements. Valley 

Forge Christian Coll. v. Americans United for Separation of Church and State Inc, 454 U.S. 

464, 471 (1982). The Constitutional component demands that the plaintiff must have suffered an 

actual or imminent “injury in fact,” or an invasion of a legally protected interest that is both 

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“concrete and particularized.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). The 

injury must also be “fairly . . . traced to the challenged action and [must] likely . . . be redressed 

by a favorable decision.” Valley Forge Christian Coll., 454 U.S. at 472 (citing Simon v. Eastern 

Kentucky Welfare Rights Org., 426 U.S. 26, 38, 41 (1976)). Furthermore, “a plaintiff's complaint 

[must] fall within the zone of interests protected by the law invoked.” Id. at 475; see also Weber 

v. Cranston School Committee, 212 F.3d 41 (1st Cir. 2000).

6. Objector has no standing to raise any objections to the Commonwealth’s request 

to assume the Agreement. Objector is not a party to the Agreement, nor has any discernible 

interest in the Agreement. Only a party to the Agreement or the debtor would have standing to 

object to the assumption of the Agreement under Bankruptcy Code section 365, as only such 

parties are “aggrieved” by the assumption. See 2 Collier Bankruptcy Manual, ¶ 365.03[1] (4th

Edition) (“Only a party who is aggrieved has standing to object to the assumption.”); In Re Dein 

Host, Inc., 835 F. 2d 402 (1st Cir. 1987) (director of lessor corporation does not have standing to 

challenge chapter 11 debtor’s assumption of lease under section 365 where harm to shareholder 

is derivative from direct injury to corporation, which has not objected); In re James Wilson 

Assocs., 965 F.2d 160 (7th Cir. 1992) (“we find it very difficult to see who might be an intended 

beneficiary of this provision [section 365] other than the lessor, and we therefore side with the 

First Circuit [in In re Dein Host Inc., in holding only the contracting parties have standing]”); In 

Re ANC Rental Corp., Inc., 277 B.R. 226 (Bankr. Del. 2002) (non-creditor competitor of debtor 

does not have standing to object as “[s]ection 365 is designed to protect the rights of parties with 

whom debtors have contractual relationships, in this case the Airport Authorities. If the Airport 

Authorities choose not to oppose the Debtors’ Motions, neither [of the competitors] have 

standing to assert the Airport Authorities’ rights.”); In Re Riverside Nursing Home, 43 BR 682 

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(Bankr. S.D.N.Y. 1984) (although mortgagee bank that has received an assignment of rents from 

a chapter 11 debtor landlord as security is regarded as party in interest, it is not a party to such 

contract or lease within the scope of 11 USC § 365 with standing to compel debtor to assume or 

reject lease).

7. Section 1109 of the Bankruptcy Code does not change the bilateral nature of the 

Assumption Motion and does not create standing in the context of section 365 of the Bankruptcy 

Code for unrelated third parties. See, e.g., In re James Wilson Associates, Inc., 965 F.2d 160, 

169 (7th Cir. 1992) (holding that section 1109 was not “intended to waive other limitations on 

standing, such as that the claimant be within the class of intended beneficiaries of the statute that 

he is relying on for his claim” and that standing under section 365 is narrower than under section 

1109); Southern Boulevard, Inc. v. Martin Paint Stores (In re Martin Paint Stores), 207 B.R. 57, 

61-62 (S.D.N.Y. 1997) (holding the same and stating that “[s]ection 365 aims to ensure that the 

landlord receives the benefit of his bargain, and looks, therefore, to the prejudice to the landlord. 

It does not deal with a third party’s benefit of its own bargain with the landlord.”).

8. Here, Objector is not a party to the lease, nor is he affected in any way by the 

Commonwealth’s assumption or rejection of the Agreement. At best, Objector currently has a 

potential civil action that could presumably render Objector a partial owner of the Premises. The

claims are not affected in the slightest by the Commonwealth’s assumption or rejection of the 

Agreement. Moreover, a claim like this would take years to resolve; possibly even longer than 

the time left on the Agreement, and the possibility of a favorable outcome for Objector in such 

legal action is completely speculative. Objector can adjudicate his claim against the 

Commonwealth’s counter parties in a more appropriate forum and nothing in the Assumption 

Motion precludes him from doing so. 

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9. Therefore, Objector’s objection should be dismissed as he lacks standing to object 

to the Commonwealth’s assumption of the Agreement under applicable First Circuit 

jurisprudence. Objector is not a party to the Agreement, and does not have standing to object 

under Bankruptcy Code section 365. Objector suffers no grievance as result of the 

Commonwealth’s assumption since Objector’s right to challenge the title of the Premises

remains unaffected by the Commonwealth’s assumption of the Agreement. 

b. Objector’s Claims are Irrelevant to the Assumption Motion

9. To determine whether the Commonwealth can assume the Agreement, the Court 

must only determine whether the proposed assumption is an exercise of sound business 

judgment. See, e.g., In re BankVest Capital Corp., 290 B.R. 443, 447 (B.A.P. 1st Cir. 2003), 

aff’d, 360 F.3d 291 (1st Cir. 2004) (“Under a motion to assume . . . the only issue properly 

before a court is whether the assumption or rejection of the subject contract is based upon a 

debtor’s business judgment.”); In re Genco Shipping & Trading Ltd., 509 B.R. 455, 463 (Bankr. 

S.D.N.Y. 2014) (debtors’ decision to assume restructuring support agreement represented sound 

exercise of debtors’ business judgment). To satisfy the “‘business judgment’ test, a debtor must 

simply put forth a showing that assumption . . . of the executory contract or unexpired lease will 

benefit the Debtor’s estate.” Id.

10. In this case, Objector has not challenged or questioned whether the 

Commonwealth can assume the Agreement on the basis of sound business judgment, the only 

requirement of section 365. Indeed, Objector has not truly objected to the Assumption Motion at 

all. Instead, Objector has merely reiterated a potential cause of action he has to annul several 

agreements with third parties entered into decades ago that are completely unrelated to the 

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Commonwealth or its Title III case, in order to attain partial title to the Premises.3 Regardless of 

whether Objector has standing or whether or not his claims have merit, his claims are completely 

irrelevant to the Assumption Motion, and will not be affected by it. Should Objector wish to 

bring these claims, in the appropriate forum and against the appropriate parties, he may do so. 

However, it is entirely inappropriate to assert them in the context of the Assumption Motion in 

this Title III case.4

c. Lack of indispensable parties

11. It should also be noted that, even if Objector has standing and the Court has 

jurisdiction over the claims raised by the Objector (neither of which are the case), Objector’s 

claims could not properly be adjudicated as Objector has failed to join indispensable parties. 

Federal Rule of Bankruptcy Procedure 7012(b)(7) provides that a court may dismiss a complaint 

for failure to join a party under Federal Rule of Civil Procedure 19. A “Rule 12(b)(7) motion 

should be granted when there is an absent party without whom complete relief will not be 

possible in the case or whose interest in the controversy is such that to proceed without this party 

might prejudice it or the parties already present in the case.” Rivera Rojas v. Loewen Group 

Intern., Inc., 178 F.R.D. 356, 360 (D.P.R. 1998). 

12. To decide whether a party is required under Rule 19 the court must perform a 

two-step analysis:

 

3 Objector has made these claims before, both in this Title III case and elsewhere, and they have been denied 

before. See Motion Requesting to Vacate Judgment for Fraud Upon the Court and Other Reliefs [ECF No. 

634], denied by Order Denying Motion for Reconsideration [ECF No. 712]; see also Reply to Motion 

Requesting to Vacate Judgment (Docket 600) for Fraud Upon the Court and Other Reliefs [ECF No. 684] at ¶ 4 

(“A lengthy complaint filed on June 29, 2016, by Javier Mandry, pro se, against all his family members, a state 

judge, attorneys for the Commonwealth of Puerto Rico and the Municipality of Ponce in this Court based on the 

same allegations (Civil No. 16-2229 (JAG)) was dismissed “sua sponte’ by Judge García Gregory on January 

26, 2017, for a number of reasons, among which, that no basis was found for federal jurisdiction.”).

4

Indeed, it is not even clear that this Court would have subject matter jurisdiction under PROMESA section 306

to adjudicate a claim between two non-debtors that does not affect the debtor’s property.

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A court must first determine whether the absent party is necessary under Rule 

19(a). If the absent party is not ‘necessary, the analysis ends. If, however, the 

absent party is necessary under Rule 19(a) but joinder of that party is not feasible . 

. . the court must apply Rule 19(b) to determine whether, in equity and good 

conscience, the party is indispensable. 

In re Olympic Mills Corp., 333 B.R. 540 (1st Cir. BAP) (internal quotation marks and citations 

omitted); see also Rivera Rojas, 178 F.R.D. at 360. 

13. According to Rule 19 (a), a party is “necessary” if, (A) in that person’s absence, 

the court cannot accord complete relief among existing parties; or (B) that person claims an 

interest relating to the subject of the action and is so situated that disposing of the action in the 

person's absence may: (i) as a practical matter impair or impede the person’s ability to protect the 

interest; or (ii) leave an existing party subject to a substantial risk of incurring double, multiple, 

or otherwise inconsistent obligations because of the interest.

14. Here, a formal complaint to annul the various agreements would necessarily 

require that Objector include as defendants all parties to such agreements and all other persons

and entities that could be affected by the undoing of such agreements. See Burger King v. 

American Nat’l Bank & Trust Co., 119 F.R.D. 672, 675 (N.D. Ill. 1988) (holding that absent 

party to contract at issue “falls squarely within the terms of Rule 19(a)(2)” and so could not be 

adjudicated); see also Wilbur v. Locke, 423 F.3d 1101, 1113 (9th Cir. 2005) (holding that all 

parties to contract are generally necessary parties in suit seeking to invalidate contract); First 

Nat’l Bank of Chicago as Trustee of Institutional Real Estate Fund F v. Acco USA, Inc.-IBT 

Retirement Plan, 842 F. Supp. 311, 319 (N.D. Ill. 1994) (contracting parties have legally 

protected interest in subject matter of litigation involving that contract under Rule 19(a), making 

them indispensable parties). Thus, Objector would need to file a formal legal action and include

as defendants the current owners of the Premises, Eduardo José Mandry Mercado and Lucía 

Casas Casal, Objector’s parents (or alternatively, their estate), the rest of the prior owners of the 

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Premises, all parties to all the agreements Objector seeks to annul and any other persons or 

entities with recorded interests over the Premises or that could be affected by Objector’s claim.

In the absence of any of these parties, this Court (or any court) would not be able to afford 

complete relief to Objector’s claim. Therefore, any such claims by Objector should be dismissed 

pursuant to Federal Rule of Bankruptcy Procedure 7012(b)(7) for failure to include indispensable 

parties.

d. Objector’s Claims are Flawed Substantively.

15. In addition to Objector’s lack of standing, the irrelevance of his Opposition to the 

Assumption Motion, and his failure to include indispensable parties, Objector’s arguments also 

fail on the merits. First, Objector has admitted that he lacks the necessary evidence to 

substantiate his claims. See Opposition at 2. Second, his Reply states that on or around 

December 13, 1996, Objector was “forced” to enter into a power of attorney that allowed his 

parents to enter on his behalf a deed or ratification of segregation and sale, which allegedly 

transferred the title of the Premises to the Ponce municipality. Reply at 4-5. However, any 

cause of action to invalidate said agreement on the basis that it was entered into through 

“violence” or “intimidation” has a four (4) year statute of limitations in Puerto Rico. See Article

1253 of the Puerto Rico Civil Code, 31 L.P.R.A. § 3512; S.L.G. Ortiz-Alvarado v. Great 

American, 182 D.P.R. 48, 62-63 (2011). Given that this agreement was entered into more than 

twenty (20) years ago, this claim is now clearly time-barred. Hence, there is simply no reason to 

entertain Objector’s objection here. 

CONCLUSION

16. For the foregoing reasons, the Commonwealth hereby requests that Objector’s

Opposition to the Commonwealth assumption of the Agreement be denied without a hearing.

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Dated: February 27, 2018

San Juan, Puerto Rico

Respectfully submitted,

/s/ Martin J. Bienenstock

Martin J. Bienenstock (pro hac vice)

Paul V. Possinger (pro hac vice)

Ehud Barak (pro hac vice)

Maja Zerjal (pro hac vice)

PROSKAUER ROSE LLP

Eleven Times Square

New York, NY 10036

Tel: (212) 969-3000

Fax: (212) 969-2900

Attorneys for the Financial Oversight and 

Management Board as Representative for the 

Debtors

/s/ Hermann D. Bauer

Hermann D. Bauer

USDC No. 215205

O’NEILL & BORGES LLC

250 Muñoz Rivera Ave., Suite 800

San Juan, PR 00918-1813

Tel: (787) 764-8181

Fax: (787) 753-8944

Co-Attorneys for the Financial Oversight and 

Management Board as Representative for the 

Debtors

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