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IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF PUERTO RICO 

IN RE:

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD OF PUERTO RICO 

As representative of 

THE COMMONWEALTH OF PUERTO RICO 

Debtor.

PROMESA

Title III 

No. 17 BK 03283-LTS 

RESPONSE TO FIVE HUNDRED SEVENTY-EIGHT OMNIBUS OBJECTION (NONSUBSTANTIVE) TO PROOF OF CLAIM NUMBER 46107 AND FOR RELIEF FROM 

STAY 

TO THE HONORABLE COURT: 

NOW comes, Robert Anel Díaz-Morales (hereafter, “Movant”), 

represented by the undersigned counsel, and respectfully opposes 

the Commonwealth of Puerto Rico’s (hereafter, “the Commonwealth”) 

Five Hundred Seventy-Eighth Omnibus Objection of the Commonwealth 

of Puerto Rico filed at Docket Entry No. 24749 (hereafter, “the 

Objection”), and moves the Court for an Order as follows for an 

order to lift the stay or, in the alternative, to allow Movant’s 

Proof of Claim in the full amount filed of $1,600,000($1.6M): 

CERTIFICATE OF COMPLIANCE WITH MEET AND CONFER REQUIREMENT 

This certification asserts a full compliance with the Sixteenth 

Amended Case Management Procedures Notice, Case Management and 

Administrative Order, as set forth in section III of the Order 

Further Amending Case Management Procedures. In compliance with 

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the Case Management Procedures and in good faith, the undersigned 

counsel hereby certify that they served a Stay Relief Notice on 

May 5, 2023, to counsel for the Financial Oversight and Management 

Board of Puerto Rico and the Puerto Rico Fiscal Advisory Authority

(“Commonwealth’s legal representatives or Commonwealth’s 

counsel”). (Exhibit 1). Since no response was received, Counsel 

for Movant followed up with Commonwealth’s legal representatives 

or Commonwealth’s counsel on June 8, 2023. (Exhibit 2). Again, 

absent of any good faith or consideration toward Movant, or his 

counsel, the individual defendants’ counsel filed an Objection to 

Movant’s Proof of Claim on July 31, 2023. (Exhibit 3). Counsel for 

Movant tried yet once again, in the spirit of resolution, rather 

than continuing with the adversary mode, to call the attention of 

the Commonwealth’s counsel of the reasons that justify either the 

lifting of the stay or the allowance of Movant’s claim in its 

entirety, and sent yet another letter on August 2, 2023, given the 

Commonwealth’s counsel failure to respond to the prior attempts to 

meet and confer made in good faith by Movant. (Exhibit 4.) In that 

letter, Movant’s counsel showed that the Commonwealth’s position

in its Objection is diametrically inapposite to the position that 

the Department of Justice of the Commonwealth assumed before the 

United States District Court of Puerto Rico (“USDC-PR”) (Delgado, 

J) in Robert Anel Díaz-Morales v. Limaris Cruz-Vélez, Sergio RubioParedes, and Emilio Arill-García, Civil No. 13-1360, to have 

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Movant’s claim against the individual defendants stayed in that 

Court. 

The Objection clearly shows bad faith and temerity as the 

Commonwealth now claims in this PROMESA case that the Movant’s 

claim is not against the Commonwealth and that the individual 

defendants are not protected by the automatic stay of this case, 

when it made the completely opposite argument before the USDC-PR 

to have Movant’s attempt to continue with the action against the 

individual defendants stayed. The unwillingness of the 

Commonwealth’s counsel to answer any communication sent by 

Movant’s counsel with the intention of trying to reach an agreement

as to the lifting of the stay, or a settlement of Movant’s Proof 

of Claim, to avoid further litigation, is patently evident from 

the Commonwealth’s temerarious Objection to Movant’s Proof of 

Claim. Therefore, the undersigned counsel had no choice but to 

submit this Response to the Objection to Movant’s Proof of Claim

so that it is deemed so the stay can be lifted, or in the 

alternative, the Proof of Claim be allowed for the entire one 

million six hundred thousand dollars ($1.6M), which it was agreed 

in the Settlement Agreement that the Commonwealth executed. 

Because of the position assumed by the Commonwealth in its 

Objection, this Honorable Court should allow Movant to continue 

the action against the individual defendants in the USDC-PR or

deem the Proof of Claim allowed in the full amount filed. 

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PRELIMINARY STATEMENT 

This Honorable Court has before itself the opportunity to 

correct a violation to the constitutional rights of a United States 

citizen. These fundamental rights were infringed every day of the 

eight and a half (8 1⁄2) years that Movant was illegally imprisoned 

due to a criminal process riddled with errors, which was overturned 

in The People of Puerto Rico v. Robert Anel Díaz Morales, 170 DPR 

749 (2007). As a result, a 21-year-old was forced to suspend his 

academic development, and his ability to positively contribute to 

the Commonwealth’s working class as a law-abiding citizen. He 

served eight and a half years (8 1⁄2) years in prison for a crime he 

did not commit due to the wanton disregard and actions of the 

individuals defendants, acting under color of law. 

Since May 5, 2023, Movant’s legal representation has attempted

to contact the Commonwealth’s legal representatives’ numerous 

times, in order to try to reach an agreement that would settle the 

Commonwealth’s obligation to pay the Settlement Agreement reached 

by the parties in the USDC-PR action. Movant’s counsel efforts to 

communicate were to no avail and felt on deaf ears. Even though a 

last-minute attempt to try to get a response was made in a call by 

Movant’s counsel, followed by a text message showing the 

impropriety of the Objection, a return call or email 

acknowledgement was never received. Movant’s legal representation 

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sent out one last communication attempt on August 2, 2023, with 

hopes of scheduling a meeting and trying to reach a settlement of 

Movant’s claim to avoid unnecessary proceedings before this Court 

and help promote judicial efficiency. (Exhibit 4). Sadly, Movant’s 

good faith attempts have fallen, once again, on deaf ears, remained 

unanswered, and thus, been infructuous. 

This is not an instance in which an ordinary creditor seeks 

payment by virtue of a traditional debt owed by the Commonwealth

for credit he has for services rendered, nor goods sold and unpaid, 

nor are we attempting to satisfy any overdue and enforceable debt.

A contrario sensu, it is before an instance in which the 

Commonwealth can indemnify a citizen for violating his 

constitutional right to liberty through what is considered a small 

payment in the grand scheme of PROMESA related judicial issues. 

Consequently, Movant files this Response to what undersigning 

counsel respectfully understands to be frivolous, reckless, and 

imbued with bad faith Objection to his Proof of Claim filed by the 

Commonwealth pertaining to his claim (No. 46107). Specifically, 

Movant contends that the settlement amount one million six hundred 

thousand dollars ($1.6M) represents a small price to pay to 

indemnify Movant, a citizen whose constitutional rights it 

contravened for almost ten (10) years. Specially, when it is taken 

under consideration that, only for services rendered by Special 

Litigation Counsel to the Official Committee of Unsecured 

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Creditors between April 19, 2019, and December 31, 2022, the 

Commonwealth paid five million one hundred forty-nine thousand 

seventy-five dollars ($5,149,075.56). ECF No. 24790. The 

Commonwealth has spent millions of dollars in this case, and the 

one million six hundred thousand dollars ($1.6M) claim of Movant 

is just a drop on the huge bucket of water of fees spent by the 

Commonwealth. This Honorable Court can take judicial notice of the 

fees paid to counsel in this case.

Now, we respectfully submit to this Honorable Court that the 

Objection and the position taken by the Commonwealth before the 

USDC-PR are completely contradictory to each other and both cannot 

stand. Either the Proof of Claim is against the Commonwealth, and 

it is deemed to be allowed for the entire agreed upon settlement

amount ($1.6M). If this Honorable Court should find that the

Commonwealth’s Objection is adequately based on law and facts, 

Movant must be allowed to proceed against the individual defendants

who illegally imprisoned him for eight and a half (8 1⁄2) years for 

a crime he did not commit.

Therefore, the undersigning counsel prays that the Objection to 

the Proof of Claim be OUTRIGHT DENIED, it is allowed in the full 

amount filed and that the stay be lifted. If the Objection 

proceeds, then the claim should be detached from all PROMESA 

related procedures and Movant allowed to proceed against the 

individual defendants. 

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FACTUAL AND PROCEDURAL BACKGROUND 

On May 8, 2013, Movant filed two (2) complaints: one before the 

Commonwealth State Court, seeking compensation for the damages 

after a wrongful conviction (Robert Anel Díaz Morales v. 

Commonwealth of Puerto Rico, et al., Case No. HSCI201300751) and 

another Complaint before the USDC-PR for violations to Movant’s 

constitutional rights under the IV, VI, VII and XIV Amendments to 

the U.S. Constitution. Robert Anel Díaz-Morales v. Sergio RubioParedes, et al., Case No. 13-1360. At the Commonwealth Court level, 

the Complaint was filed under PR Law No. 104 of 1955, the so called 

Claims and Demands against the State Act, 32 LPRA § 3077 et seq. 

At the USDC-PR, the Complaint was against the individual 

defendants, in their personal capacities as officers of the 

Commonwealth, in connection with the investigation and prosecution 

of the murder of Ms. Kenia Rosario Viera. ECF No. 1 (This and any 

other reference to a docket filing refer to Case No. 13-1360). 

The Commonwealth action, filed by Movant and his close relatives, 

sought compensation from the Commonwealth, Puerto Rico’s 

Department of Justice, the Puerto Rico Police, and their insurance 

companies for the damages he and his relatives suffered after 

Movant was incarcerated for being falsely accused and convicted of 

the first-degree murder of Ms. Keila Rosario Viera, aggravated 

burglary, and aggravated restriction of liberty. 

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On that same date, Movant filed another Complaint before the 

USDC-PR against the individual defendants in their personal 

capacities, Robert Anel Díaz-Morales v. Sergio Rubio-Paredes, et 

al., Case No. 13-1360, pursuant to 42 U.S.C. § 1983 for violations 

to Movant’s constitutional rights under the Fourth, Sixth, Eighth 

and Fourteenth Amendments to the United States Constitution in 

connection with the investigation and prosecution of the murder of 

Ms. Kenia Rosario Viera. ECF No. 1. 

Through the actions filed in both jurisdictions, Movant sought 

to be indemnified for the damages he suffered after eight and a 

half (8 1⁄2) years of unjust imprisonment due to the illegal acts of

the Commonwealth, its governmental instrumentalities, and the

individual defendants, as officers of the Commonwealth acting 

under color of law. 

After almost four years of litigation, on the eve of trial, the 

parties reached a confidential settlement agreement on February 3, 

2017. ECF No. 248. In this agreement, Movant agreed to settle all 

matters pending in both the Commonwealth and the USDC-PR actions

for the total amount of one million six hundred thousand dollars 

($1.6M). The Commonwealth agreed to pay the total settlement amount 

in six (6) equal yearly installments of two hundred twenty-eight 

thousand five hundred seventy-one dollars ($228,571.00), and a 

final instalment of two hundred twenty-eight thousand five hundred 

seventy-four dollars ($228,574.00). Movant agreed to petition the 

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Commonwealth Court for the dismissal with prejudice of the action 

filed there. He and his relatives waived the right to file a 

lawsuit in any forum of whatever nature for all and any claims 

arising out of his federal action. Nevertheless, under the 

Settlement Agreement the Commonwealth did not waive its 11th

Amendment sovereign immunity. The Settlement Agreement predates 

this PROMESA case.

Before the first installment was due, on May 3, 2017, the 

Financial Oversight and Management Board filed a petition for 

bankruptcy relief on behalf of the Commonwealth under Title III of 

PROMESA. Then, on September 4, 2017, the individual defendants, 

invoking the alleged rights of the non-party Commonwealth in the 

USDC-PR action, and without submitting the Commonwealth to the 

jurisdiction of USDC-PR, through an Informative Motion, moved to 

stay the proceedings solely based on the filing of this Title III 

case. ECF No. 256. On October 19, 2017, the USDC-PR issued an Order 

denying the application of the stay. ECF No. 258. The District 

Court’s rationale was that the stay should be denied because the 

Complaint in the USDC-PR action was not against the Commonwealth, 

the Commonwealth was never a party to the action nor the Settlement

Agreement (although it agreed to pay it), and that the Complaint

was it on account of a debt or a claim of the Commonwealth. The

Court made it clear that Movant did not seek in the Complaint any 

claim-debt-related collection litigation against the Commonwealth, 

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and that the damages claim against the individual defendants are 

certainly not “debts.” individual defendants appealed and on May 

10, 2021, the First Circuit affirmed the USDC-PR’s Order denying 

the applicability of the stay (see ECF No. 258), because there was 

“no ‘action’ or plaintiff ‘proceeding’ demanding that the 

Commonwealth make the payment to the plaintiff, and there has been 

no effort to ‘commence’ or ‘continu[e]’ one.” ECF No. 279 at 9.

On June 8, 2021, after receiving the First Circuit’s mandate, 

Movant moved to schedule a status conference to “address pending 

matters and properly schedule this case going forward.” ECF No. 

282. In this case —being as it still was, in its final stages with 

only trial scheduled to commence— a status conference was held to 

discuss possible solutions to the matter of the payment of the 

installments due and payable, and that had already settled the 

action against the individuals with the Commonwealth paying for 

the settlement, as counsel for the individual defendants, and as 

compensation for Movant’s damages, explore other alternatives for 

settlement, or continue the action against the individual

defendants. ECF No. 288. 

After the status conference, the individual defendants filed 

yet another motion to inform this Court of the applicability of 

the automatic stay. ECF No. 290. Then, on November 22, 2021, 

another settlement conference was held before the USDC-PR, and the 

conference report and order were issued. ECF No. 301. In hopes 

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that the parties could or would identify alternatives for Movant 

to obtain, at least partial execution of the Judgment before the 

imposition of the stay, the Court instructed counsel for the 

individual defendants to meet with their superiors, including the 

Commonwealth’s Secretary of Justice, and identify mechanisms that 

may bring the action to a negotiated resolution. Nevertheless, 

before the Court could dispose of the motion for the applicability 

of the stay and before the follow up conference, the individual

defendants appealed from the settlement conference report and 

Order of November 22, 2021. 

On April 13, 2022, the automatic stay was extended to this case 

pending the resolution of In re: The Financial Oversight and 

Management Board for Puerto Rico, Case No. 17-3283 (LTS) or further 

order from the Court. ECF No. 308. This was in response to the 

individual defendants’ informative motion regarding the 

applicability of the automatic stay provision of the Puerto Rico 

Oversight, Management, and Economic Stability Act (“PROMESA”) to 

the individual defendants as government officials. ECF No. 290. 

Motion which was opposed by Movant and then replied by the 

individual defendants. ECF Nos. 292; 297. 

The main argument in support of this decision was that: 

[T]he Court finds that Plaintiff sought to enforce the 

Commonwealth to pay Plaintiff according to the terms of 

the settlement agreement during the status conference on 

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September 30, 2021, because the Commonwealth is the only 

party that has expressly committed to pay the agreedupon amount. Therefore, the Court holds that the case is 

stayed pursuant to PROMESA’s automatic stay provision. 

ECF No. 307 at p. 7.

On July 31, 2023, Movant’s legal representatives were 

notified that the Proof of Claim filed by him on May 25 of 

2018 was objected because it: 

“fails to provide a basis for asserting a claim against 

the Commonwealth of Puerto Rico. Proof of claim and 

supporting documentation only show liability between the 

claimant and individuals in their personal capacities, 

who are not part of the Title III proceedings.” 

STANDARD OF REVIEW FOR A RELIEF STAY MOTION 

Section 362(a) of the Bankruptcy Code provides that the filing 

of a bankruptcy petition operates as a stay on all creditor 

collection efforts against the debtor’s assets, 11 U.S.C. § 362(a). 

This is known as an “automatic stay” and, although the reach of 

the automatic stay is broad, it is not unlimited. 3 Collier, On 

Bankruptcy ¶ 362.01. Overall, the stay bars any debt collection 

effort, except those arising from debts which were constituted 

post-bankruptcy petition. 

The general purpose of the automatic stay is to grant time to 

the debtor to reorganize his or her finances without being harassed 

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by creditors. But like most of the rights the law grants, the 

automatic stay is not a bulletproof and insurmountable barrier. 

Subsection (d)(1) of section 362 provides that, on the request of 

a party-in-interest and after notice and a hearing, the court shall 

grant relief from the automatic stay “for cause,” 11 U.S.C. § 

362(d). 

Aside from the “lack of adequate protection” of a secured 

creditor, the term “cause” is not defined in the Bankruptcy Code 

and neither it is defined in Title III of PROMESA. Consequently, 

in the absence of a statutory criterion, different courts have 

devised various multi-factor tests to determine whether “cause” 

has been met in any given case to lift the stay. See, e.g., In re 

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

Prods. Co., 141 Bankr. 574 (D. Del. 1992); In re Granati, 271 

Bankr. 89 (E.D. Va. 2001); In re Johnson, 115 Bankr. 634 (D. Minn. 

1989); In re Pro Football Weekly, Inc., 60 Bankr. 824 (N.D. Ill. 

1986); In re Curtis, 40 Bankr. 795 (D. Utah 1984). Up until now, 

courts have not considered every factor of the multi-factor test 

to lift a stay in such a way that, in some cases, they have even 

relied on a single factor. For example, the Bankruptcy Court for 

the Southern District of Georgia stated that “[i]n weighing these 

factors, this Court does not need to specifically address each of 

the various factors, but instead only needs to consider those 

factors relevant to the particular case, and this Court does not 

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need to assign them equal weight.” In re R. J. Groover 

Construction, 411 Bankr. 460, 464 (S.D. Ga. 2008). Thus, district 

courts have relied on some of the relevant factors of their multifactor test without assigning equal weight to them in order to 

grant relief from stay. 

To be clear, the automatic stay does not confer absolute 

immunity to the filer against claims that are sustained by just 

cause. The Court has the discretionary power to decide case-bycase if sufficient “cause” has been shown to lift the stay. But, 

as In re Kerns made clear: the court does not have “total 

discretion” in deciding to lift the stay because § 362(d) of the 

Bankruptcy Code directs the court to grant relief from the stay 

for cause by using the word “shall” instead of “may”, and 

therefore, “where cause is found to exist, the courts have no 

discretion to deny relief,” In re Unanue-Casal, 159 Bankr. 90, 94 

(D. P. R. 1993) (emphasis added) (quoting In re Kerns 111 Bankr. 

777, 782 footnote 2 (S.D. Ind. 1990)). For this reason, this Court 

should engage in an equitable balancing of the various harms at 

stake and determine that there is more than sufficient cause to 

lift the stay. 

In Puerto Rico, with PROMESA, a similar stay is also barring 

any and every effort of creditors to collect against the 

Commonwealth, its instrumentalities, and its property. And like 

the Bankruptcy Code, section 405(e) of PROMESA provides that, upon 

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request of a party and “after notice and hearing,” the Court shall 

grant relief from the stay “for cause shown” 48 U.S.C. § 2194(e). 

That is, in both cases, the stay is not an absolute blockage and 

may be lifted by presenting “cause” for its relief as we 

respectfully do in this motion. 

In our District Court, there has been at least one case decided 

that provided a multi-factor test which was later affirmed by the 

First Circuit, that is, In re Unanue-Casal, 159 Bankr. 90 (D. P. 

R. 1993) (later aff’d by In re Unanue-Casal, 23 F.3d 395 (1st Cir. 

1994)). This Court in In re Unanue-Casal, in an effort to consider 

the harms at stake, took guidance from the multi-factor test put 

forward in In re Curtis, supra at 799-800, which consists of the 

following 12 factors: 

(1) whether the relief will result in a partial or 

complete resolution of the issues; (2) the lack of any 

connection with or interference with the bankruptcy 

case; (3) whether the foreign proceeding involves the 

debtor as fiduciary; (4) whether a specialized tribunal 

has been established to hear the particular cause of 

action and that tribunal has the expertise to hear such 

cases; (5) whether the debtor's insurance carrier has 

assumed full financial responsibility for defending the 

litigation; (6) whether the action essentially involves 

third parties, and the debtor functions only as a bailee 

or conduit for the goods or proceeds in question; (7) 

whether litigation in another forum would prejudice the 

interest of other creditors, the creditors' committee 

and other interested parties; (8) whether the judgment 

claim arising from the foreign action is subject to 

equitable subordination under section 510(c); (9) 

whether movant's success in the foreign proceeding would 

result in a judicial lien avoidable by the debtor; (10) 

the interest of judicial economy and the expeditious and 

economical determination of litigation for the parties; 

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(11) whether the foreign proceedings have progressed to 

the point where the parties are prepared for trial; (12) 

the impact of the stay on the parties and the “balance 

of hurt.” 

Additionally, the Court relied on two more factors: namely, 

the misconduct or bad faith of the debtor, and whether the creditor 

has a probability of prevailing on the merits, In re Unanue-Casal, 

supra at 96. 

Let us now submit our arguments in accordance with the causes 

that have guided this Court in the past to lift a stay. These 

arguments are to be measured against the central argument in 

support of staying this case as it was held by the USDC-PR in its 

Opinion and Order of April 12, 2022. ECF No. 307. To be brief, the 

USDC-PR held that the case should be stayed because Movant sought 

to enforce the Commonwealth to pay him since the Commonwealth is 

the only entity that has expressly agreed to pay the settlement 

amount. Following the case law cited above, we will exclusively 

consider factors that are relevant to this case and assign them 

the whole weight of the criterion. 

A. FACTOR: WHETHER THE RELIEF WILL RESULT IN A PARTIAL OR 

COMPLETE RESOLUTION OF THE ISSUES 

The action filed by Movant was in its final stages in the 

USDC-PR and a settlement had been reached with the individual 

defendants before they requested that PROMESA’s automatic stay be 

applied to the action. Thus, if relief from stay is granted, then 

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it would result in a complete resolution of the issues since the 

only step yet taken is that the Commonwealth provide monetary 

relief to Movant, considering it was its Courts who deprived him 

of eight and a half (8 1⁄2) years of his life in clear violation of 

his constitutional rights. Otherwise, if the settlement is not 

enforceable in the USDC-PR after lifting the stay, the action 

should continue against the individual defendants and the 

Commonwealth will determine whether it is going to defend them or 

not. Under any circumstance, lifting the stay would conclude any 

PROMESA implications. 

B. FACTOR: THE LACK OF ANY CONNECTION WITH OR 

INTERFERENCE WITH THE BANKRUPTCY CASE 

This factor is supported by the Bankruptcy Code’s legislative 

history as stated in the following Senate Report which asserts 

that “[t]he lack of adequate protection of an interest in property 

is one cause for relief, but is not the only cause. Other causes 

might include the lack of any connection with or interference with 

the pending bankruptcy case.” S. Rep. No. 989, 95th Cong., 2d Sess. 

52. Adequate protection is not applicable here as the claim of 

Movant is not a secured debt. This we look at the other factor. 

Furthermore, Collier adds that “[a]ctions which are only remotely 

related to the case under title 11 or which involve the rights of 

third parties often will be permitted to proceed in another forum,” 

3 On Bankruptcy ¶ 362.07(3). It is clear enough to see that in our 

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case, Movant, as a third party of the Commonwealth’s bankruptcy 

case, holds a claim which is only remotely related to the 

Commonwealth’s bankruptcy under PROMESA’s statutory provisions.

Movant is not an investor nor has any lien nor interest in the 

estate of the Government, its instrumentalities, or agencies. He 

is not attempting to satisfy a credit owed by the Commonwealth, 

but he is attempting to obtain indemnification because of the 

damages he suffered after being wrongfully incarcerated for the 

better part of a decade. Movant’s claim is not a “debt,” rather it 

is a compensatory indemnification. Plus, the amount already 

settled upon between Movant and the individual defendants is of no 

significance for a proper reorganization of the Debtor, whose plan 

already has been confirmed, and which was never a party in the

litigation before the USDC-PR and only agreed to pay the amount 

because of the damages caused by its officers who it provided legal 

defense thought the Commonwealth’s counsel. Therefore, Movant’s 

claim will have no significant effect on the bankruptcy estate.

Additionally, the automatic stay is not serving the purpose for 

which Congress enacted it. Congress’ fundamental purpose of the 

stay to be a “breathing spell” for debtors in bankruptcy 

proceedings. In re Jefferson Cnty., 491 Bankr. 277, 285 (N.D. Ala. 

2013); see also In re Lomas Fin. Corp., 117 Bankr. 64, 67 (S.D. N. 

Y. 1990) (remanded on other grounds, 932 F.2d 147 (2d Cir. 1991)); 

H.R. Rep. No. 95-595, at 340 (1977). In In re Kerns, supra, the 

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District Court of Southern District of Indiana expressed that “a 

review of the legislative history reveals that Congress did not 

intend the automatic stay to remain in force when the proceedings 

stayed have no relationship to the purpose of the automatic stay,” 

111 Bankr. at 787 (S.D. Ind. 1990). 

In this case, the stay is not serving its purpose because: (1) 

The individual defendants, that are not debtors in this case, have 

no interest in gaining a “breathing spell” in order to comply with 

the bankruptcy proceedings because it is plainly inapplicable to 

them; (2) the amount settled upon is insignificant compared to the 

estate of the debtor; (3) Movant is not a secured creditor, that 

is, he has no interest nor lien on any property of the debtor, and 

(4) Movant’s claim will have no real effect on the effective 

reorganization of the debtor. Therefore, Movant’s claim does not 

interfere with the goal of equality of distribution between 

creditors, nor does it interfere with the purpose of the stay. 

This Court will note there is no just cause for the continuance 

of the stay in this case. And after all, the Commonwealth has had 

more than a “breathing spell” by unjustifiably applying the stay 

to Movant’s action in the USDC-PR action as the Commonwealth has 

not paid a single of the instalments due for 2017, 2018, 2019, 

2020, 2021, 2022 and 2023. If the installments had been timely 

paid, only the last installment would be due on June 30, 2024, for 

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the amount of two hundred twenty-eight thousand five hundred 

seventy-four dollars ($228,574.00). 

C. FACTOR: WHETHER LITIGATION IN ANOTHER FORUM WOULD 

PREJUDICE THE INTEREST OF OTHER CREDITORS, THE 

CREDITORS' COMMITTEE, AND OTHER INTERESTED PARTIES. 

In this case, there is no possibility of the claim being 

litigated in another forum because the present case has already 

been resolved. The reason we are before this Honorable Court is to 

allow Movant to be compensated under the agreement that the 

Commonwealth has agreed to pay for the violation of his civil 

rights, including his right to due process under both the United 

States and Commonwealth Constitutions. Therefore, there is no need 

to engage in further litigation that may affect the interests or 

rights of other creditors of the Commonwealth. In the interest of 

doing justice to those who seek it, the Court should grant relief 

from stay. 

In short, we respectfully submit that granting relief from stay 

will not prejudice the interests of other creditors. Therefore, in 

the interest of doing justice to those who seek it, as Movants 

does, the Court should grant relief from stay. And the USDC-PR 

action should continue against the individual defendants with the 

same consequence. 

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D. FACTOR: THE INTEREST OF JUDICIAL ECONOMY AND THE 

EXPEDITIOUS AND ECONOMICAL DETERMINATION OF LITIGATION 

FOR THE PARTIES. 

The proceedings in Movant’s civil action, as argued above, 

are sufficiently advanced so as to not warrant the resolution of 

the Debtor’s bankruptcy. It would be a waste of judicial resources 

to attend proceedings of Movant’s civil action related to the 

Commonwealth (which was never a party) considering that the parties 

had already reached a settlement. After many years of litigation, 

the Court should take into consideration that any other proceeding 

in this case unrelated to the payment of the settlement is a waste 

of judicial resources and a strike against the principle of 

judicial economy. 

E. FACTOR: THE IMPACT OF THE STAY ON THE PARTIES AND THE 

"BALANCE OF HURT." 

We now turn to our direct dissension against the central 

argument in support of staying the case of the Opinion and Order

that the USDC-PR held on April 12, 2022. It states that the 

automatic stay should be granted and extended to the present case 

since “Plaintiff sought to enforce the Commonwealth to pay 

Plaintiff according to the terms of the settlement agreement during 

the status conference on September 30, 2021, because the 

‘Commonwealth is the only party that has expressly committed to 

pay the agreed-upon amount.’” ECF No. 307 at p. 7. The Court 

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granted and extended the stay to the individual defendants because 

the Commonwealth will pay the settled-upon amount. 

We respectfully dissent with the granting and extension of the 

stay, but not because of the issue of who will be paying for the 

damages, rather because staying civil rights cases under 42 U.S.C. 

§ 1983 will provide a carte blanche to Puerto Rico’s officials in 

their personal capacities to discriminate and to act against the 

U.S. Constitution. 

Based on this observation, Professor Carlos del Valle Cruz 

recommends that the automatic stay provisions at issue here must 

be read in light of section 7 of PROMESA, which provides that the 

Act “shall [not] be construed as impairing or in any manner 

relieving a territorial government, or any territorial 

instrumentality thereof, from compliance with Federal laws...”. He 

further adds that “we read the reference to “compliance with 

Federal laws” to encompass the Constitution. Neither the nature of 

a § 1983 action, which does not expose the Commonwealth to monetary 

liability, nor PROMESA’s statutory language, warrant extending the 

stay provisions to § 1983 actions seeking to enforce fundamental 

constitutional rights [...],” Brief for Appellant, at 15, Pabón 

Ortega v. Llompart Zeno (1st Cir. 2018). In sum, Del Valle Cruz 

states that the stay must be lifted if the claim against the debtor 

stems from a civil rights action in order to correct and prevent 

further violations against U.S. citizens residing in Puerto Rico. 

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We agree with Professor Del Valle Cruz and bring forth this 

argument for consideration by the Court. We respectfully contend 

that the USDC-PR should take an exception to its own argument 

quoted from the Opinion and Order precisely because this is a case

which relates to violations of constitutional rights and not just 

another creditor-debtor action.

If the Court decides to continue staying the proceedings in the 

USDC-PR action, the inevitable consequence is a total stagnation

of civil rights and the lack of constitutional protection for 

Puerto Rico’s residents from state officials’ attacks. If the 

application of the automatic stay is done in absolute terms —

without distinguishing civil rights cases from other creditordebtor actions— then the victims of government officials will have 

no incentive whatsoever to seek justice and correction against 

them. The constitutional protection of U.S. citizens residing in 

Puerto Rico against state officials will be de facto obstructed

due to a lack of incentive for the victims to seek rectifying 

justice for the Commonwealth officials’ actions. 

This Court must consider if the continuance of the stay in this 

civil rights case equals to a lack of constitutional protection 

and a lack of incentive to pursue the protection of said 

constitutional rights. The balance of hurt weighs heavily for the 

victims of civil rights violations as it so happened here with 

Movant, who suffered eight and a half years of unjust imprisonment 

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due to the negligence and wrongful acts of state officials. At the 

same time, we must keep in mind that lifting the stay will not 

doom the Commonwealth’s attempt at reorganizing, since the 

Movant’s claim will have no real significant effect on the 

bankruptcy estate. These are the elements which are being put 

forward to the test on the scale, and it is blatantly clear after 

our argument that the scale weighs heavily on Movant’s side.

Additionally, staying civil rights actions under PROMESA’s 

automatic stay certainly implies due process issues to uphold 

fundamental constitutional guarantees. Conversely, lifting the

stay runs parallel to the equal protection of the law that the

Movant is entitled under the U.S. Constitution. The Court should

be flexible enough in order to grant the process that is due in

civil rights actions and allow the action to continue to settlement

or to trial against the individual defendants who are represented

by the Commonwealth under PR Law 104-1955.

This becomes more evident when faced with the fact that here,

there is no simple creditor-debtor relation, rather the relation

here is more aptly defined as an injured-indemnifier one. Instead

of a debtor, the state is an indemnifier because it has injured a

private person; and, instead of a creditor, the affected party is

an injured person who has the right to be indemnified for the

violation of his civil rights. Lifting the stay is the only way to

correct the severe curtailment of Movant’s constitutional rights.

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For this reason, the stay should not be continued because the 

Commonwealth is the only party committed to pay; but rather the 

stay should be lifted because if not, then the victims of 

constitutional rights violations by state officers will have no 

incentive to seek justice, giving state officials carte blanche to 

discriminate and to act against the U.S. Constitution. 

F. FACTOR: MISCONDUCT OR BAD FAITH. 

The individual defendants’ motives in soliciting a stay in 

Movant’s civil action when it was already in its final stages —

i.e., after having reached a settlement agreement by the parties 

involved— are clearly in bad faith. To be transparent, the 

individual defendants’ actions show a palpable abusive use of this 

laudable judicial mechanism. 

Although there is no precise standard with which to measure bad 

faith, courts have found factors which show an intent to abuse the 

judicial process. For example, in Laventhol & Horwarth, supra, the 

Court determined that a factor which shows the bad faith of the 

debtor was whether the debtor was trying to circumvent the nonbankruptcy litigation and avoid an unfavorable state court’s 

judgment, cited in In re Unanue-Casal, supra, at 101. 

This attempt at circumventing the non-bankruptcy litigation is 

exactly what is happening in Movant’s civil action. The individual 

defendants have requested the application of an automatic stay to 

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this case to avoid the settlement payment. This suggests that the 

individual defendants’ motives are to circumvent and avoid 

delivering justice after it was established that individual 

defendants, and the Commonwealth in the Commonwealth action,

incurred in illegal actions that cost eight and a half (8 1⁄2) years 

of Movant’s life. By analogy, one can see that the debtor’s bad 

faith as cited in In re Unanue Casal, applies when a third party 

incurs in bad faith by requesting the debtor’s stay.

Another clearcut indication of the individual defendants’ bad 

faith in requesting the stay is that it does not align with the 

purpose which Congress enacted it for. As stated above, Congress 

intended for the fundamental purpose of the stay to be a “breathing 

spell” for debtors in bankruptcy proceedings, H.R. Rep. No. 95-

595, at 340 (1977). The individual defendants are not gaining a 

“breathing spell” by adhering to the debtor’s stay, rather they 

are abusing the automatic stay by maliciously delaying the payments 

that were settled upon. “It has been long recognized that one who 

invokes the protective provisions of the bankruptcy laws must do 

so in order to accomplish and further the expressed legislative 

aim of the particular Chapter and not for any other purpose.” In 

re Mogul, 17 Bankr. 680, 681 (M.D. Fla. 1982).

In contrast, Movant’s action expresses his good faith since the 

confidential settlement reached on February 3, 2017, in Civil No. 

13-1360 (PG) before the USDC-PR with the individual defendants

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Limaris Cruz Vélez, Emilio Arill García, and Sergio Rubio Paredes 

—all sued in their individual personal capacities— benefited the 

Commonwealth of Puerto Rico. This is because the settlement 

resulted in the dismissal with prejudice of a parallel state case 

styled Robert Anel Díaz Morales, et al. v. ELA, et al., Civil No. 

DDP 2013-0403 (505). In that case, the Commonwealth and some of 

its instrumentalities, as opposed to the action before the USDCPR, were indeed named parties. 

By disposing of all the claims against the Commonwealth and its 

instrumentalities after the settlement, the Commonwealth benefited

since the dismissal of the Commonwealth Action was also dismissed, 

with prejudice, and it covered claims of Movant’s relatives against 

the Commonwealth. There is no doubt that the aforementioned should 

be taken as a sign of good faith since Movant merely seeks speedy 

and economic justice under 42 U.S.C. § 1983, after his 

constitutional rights were violated by state officials.

We now bring the attention of the Court to what was stated by 

the Bankruptcy Court for the Southern District of Georgia in In re 

R. J. Groover Construction, supra, this Court only needs to rely 

on the relevant factors of its standard multi-factor test as 

acknowledged in In re Unanue-Casal, supra, to grant the relief 

from stay here petitioned. Moreover, the automatic stay’s reach is 

limited, that is, it does not confer absolute immunity to the 

debtor against its creditors if sufficient cause for relief has 

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been shown as it has effectively been done here. Following both, 

subsection (d)(1) of section 362 of the Bankruptcy Code, 11 U.S.C. 

§ 362(d), and section 405(e) of PROMESA, 48 U.S.C. § 2194(e), this 

Court “shall grant relief from the stay” if cause has been shown. 

As interpreted in In re Kerns, supra, if cause has been shown and 

found to exist, this Court has no discretion to deny relief 

precisely because our laws direct the courts of our country to 

grant relief from stay by using the word “shall” instead of “may.”

Of the multi-factor test acknowledged by this Court in In re 

Unanue-Casal, supra, six (6) factors have been shown to be relevant

and to constitute just cause for this Court to grant relief from 

the automatic stay. In short, it has been shown that: (1) the 

relief will result in a complete resolution of the issues; (2) 

Movant’s claim will have no significant effect on the bankruptcy 

case nor will it cause interference on the effective reorganization 

of the debtor; (3) there is no more litigation needed in this case, 

other creditors’ interest will remain unaffected regardless of the 

outcome of Movant’s claim; (4) any other proceeding unrelated to 

the payment of the settlement would be a waste of judicial 

resources and an attack against the principle of judicial economy; 

(5) the balance of hurt weighs heavily for the victims of civil

rights violations since it will cut any incentive to seek 

reparation of civil rights violations and it will provide a carte 

blanche to Puerto Rico’s officials in their personal capacities to 

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discriminate and to act against Federal laws and the U.S. 

Constitution, and (6) the individual defendants’ motives in 

requesting the application of the debtor’s automatic stay are in 

bad faith since they are simply using it to circumvent and avoid 

settlement payment and they are not gaining a “breathing spell” by 

adhering to the stay as Congress intended its fundamental purpose 

to be. 

We hold that, having met these six (6) factors of this Court’s 

multi-factor test, it is more than enough for this Court to 

determine that just cause exists for lifting the stay. This Court 

has the inherent discretionary power to prevent the continuation 

of the stay if it perceives an intent to abuse the purpose of the 

Bankruptcy Code, see R. L. Ordin, The Good Faith Principle in the 

Bankruptcy Code: a Case Study, 38 BUS. LAW. 1795 (1983). The 

automatic stay of Case No. 13-1360, should be lifted pursuant to 

11 U.S.C. § 362(d) and 48 U.S.C. § 2194(e) for cause shown, 

including but not limited to reasons stated in this motion for 

relief from stay. 

It is important here to highlight that the fact that the 

Commonwealth is the only party that has expressly committed to 

paying the agreed-upon settlement amount, is immaterial for the 

purposes of lifting the automatic stay. If this Court evaluates, 

as it has done before, the “balance of hurt” in the present case, 

it will find that it alone suffices to dim the Opinion and Order’s 

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reason as an argument for sustaining the stay. Thus, diminishing 

the consequence of whether Movant sought to enforce the 

Commonwealth to pay or not during the status conference on 

September 20, 2021, and/or any other instance. The importance of 

the immateriality of this point cannot be stressed enough, since 

it was the main reason which led the USDC-PR to grant the 

individual defendants’ motion to stay the case under PROMESA. ECF 

No. 307, at p. 7. 

RESPONSE TO THE OBJECTION OF THE PROOF OF CLAIM 

Under Title III of PROMESA, the automatic stay extends to 

actions brought to collect judgment issued before Title III was 

filed. Autonomous Municipality of Ponce v. F.O.M.B. (In re 

F.O.M.B.), 939 F.3d 356, 360-61 (1st Cir. 2019). Said automatic 

stay also extends to the Commonwealth and officers in their 

official capacity. Peaje Invs., LLC v. F.O.M.B. (In re F.O.M.B.), 

899 F.3d 1, 5-6, 6 n.2 (1st Cir. 2018). The stay applies even if 

the payment agreement was struck before the Title III petition 

filing and to the remanent of any debt if payment started before

Title III filing. Colon-Torres v. Negron-Fernandez, 997 F.3d 63, 

73 (1st Cir. 2021). 

There should be no doubt that the individual defendants' actions 

are imputable to the Commonwealth and any argument to the contrary, 

at this stage of the proceedings, as the Commonwealth’s legal 

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representatives have done in the Objection, is inconsistent and 

contradictory to the Commonwealth's past actions and arguments,

and, consequently, they are estopped from doing so. In this sense, 

the doctrine of equitable estoppel prevents one “from denying the 

consequences of his conduct where that conduct has been such as to 

induce another to change his position in good faith or such that 

a reasonable man would rely upon the representations made.” Clauson 

v. Smith, 823 F.2d 660, 662 (1st Cir.1987). There are four 

requirements for this estoppel to apply: (1) the party to be 

estopped know the facts; (2) that party must intend that his 

conduct be acted upon (or must act in a way that leads the party 

asserting the estoppel to believe it is so intended); (3) the 

latter must be ignorant of the true facts; and (4) he must rely on 

the estopping conduct to his detriment. Id.

In this case, this Court will find the four (4) requirements to 

apply the doctrine of equitable estoppel. First, The Commonwealth 

knew the facts because it was party to the State Court proceedings 

in which they were defending themselves because of the individual

defendants’ actions and by virtue of the settlement agreement they 

consented to pay Movant a compensation in several installments. 

Second, Movant voluntarily dismissed the two lawsuits pursuant to 

the settlement agreement, and therefore acted on the premise that 

he would be compensated for the damages he suffered as a result of 

his wrongful incarceration. Third, Movant was unaware that both 

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the Commonwealth and the officials would use PROMESA as a 

subterfuge to prevent him from being properly compensated as agreed 

in the Settlement Agreement. Finally, there is no doubt that Movant 

relied on the Commonwealth's actions to his detriment. Movant 

agreed to have the State Court action against the Commonwealth 

dismissed with prejudice by virtue of a settlement between him and 

the Commonwealth that has not been satisfied. Now, the 

Commonwealth's legal representatives temerariously claim that 

Movant’s Proof of Claim does not assert a claim against the 

Commonwealth because the liability asserted was between Movant and 

the individual defendants.

Respectfully, and in conclusion, the Objection made by the 

Commonwealth to Movant’s Proof of Claim is reckless, frivolous, 

contradictory, and constitutes a vexatious action that should be 

punished by this Honorable Court. Originally, the PROMESA stay of 

the Federal Court action filed by Movant was not extended to the 

individual defendants, as they were government officials, and the 

Commonwealth was not a party to the action before the USDC-PR.

Nevertheless, Peaje Invs., LLC v. F.O.M.B. (In re F.O.M.B.), supra, 

confirmed PROMESA’s stay was to be extended to individuals that 

were officers of the Commonwealth. Therefore, the counsel for the 

individual defendants, who were defense counsel from the 

Department of Justice of the Commonwealth, moved to apply the stay 

because they claimed that the action was against the Commonwealth 

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(as the Commonwealth had to pay the settlement), and because the

PROMESA stay applied to the individual defendants’ officers. 

However, on July 31, 2023, the Commonwealth made a completely 

contradictory argument in order to object to the Proof of Claim 

filed by Movant in this case. 

Considering this, we respectfully submit that this Honorable 

Court is in a position to understand why both Movant and his 

counsel were flummoxed when informed of opposing counsel's grounds 

for objecting Movant's Proof of Claim. Therefore, we respectfully 

ask this Court to find the Objection to Movant’s Proof of Claim to 

be frivolous and temerarious, find it baseless, lift the stay and 

allow the entire amount arising from Movant’s Proof of Claim of 

one million six hundred thousand dollars ($1.6M) as compensation 

for the violation of Movant’s constitutional rights settled at 

arm’s length in the USDC-PR action. 

CONCLUSION 

We respectfully submit that the Honorable Court has been 

positioned to deny Commonwealth's counsel's frivolous and reckless 

Objection to Movant's Proof of Claim, to lift the stay, and to

deem the Proof of Claim to be allowed for the entire agreed upon 

settlement of one million six hundred thousand dollars ($1.6M). 

Should this Honorable Court find our Opposition to the 

Commonwealth’s Objection to Movant’s Proof of Claim is misplaced, 

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we request that Movant’s Claim be detached from PROMESA related 

procedures, and that Movant be allowed to proceed with his action 

against the individual defendants. This is because we would not be 

making a claim against Commonwealth, and there would be no obstacle 

to Movant's ability to seek damages for the eight and a half (8 1⁄2)

years he was unjustly and illegally incarcerated for a crime he 

did not commit. 

Regardless of how this Honorable Court decides to exercise 

its wisdom in resolving Movant's present Response, we request that 

we be allowed to participate in and present Movant's position at 

the hearing to be held on August 30, 2023. 

WHEREFORE, Movant respectfully requests that this Honorable 

Court DENY the Omnibus Objection filed at D.E. 24749 regarding 

Movant's Proof of Claim, that the stay be lifted, and his claim be 

deemed allowed for the entire agreed upon amount of one million 

six hundred thousand dollars ($1.6M). Otherwise, if this Honorable 

Court should find that the Objection has a legal basis, that the 

procedures be detached from PROMESA related procedures and

Movant’s Proof of Claim be allowed to pursue his claim against the 

individual defendants. Because of the Commonwealth’s actions 

before the USDC-PR and before this Honorable Court, and its failure 

to try to reach an agreement and having forced Movant to file this 

Response, Movant requests that this Honorable Court awards Movant 

reasonable attorney’s fees incurred in the filing of this Response. 

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Movant also requests that his undesigned counsel be allowed to 

participate in the hearing to be held on August 30, 2023. 

RESPECTFULLY SUBMITTED. 

In San Juan, Puerto Rico, on August 14, 2023 

IT IS HEREBY CERTIFIED that the foregoing was filed with the 

Clerk of the Court using the CM/ECF system, which will send 

notification electronically to all attorneys of record. 

SALDAÑA, CARVAJAL & VÉLEZRIVÉ, PSC 

166 Ave. de la Constitución 

San Juan, Puerto Rico 00901 

Tel: (787) 289-9250 

Fax: (787) 289-9253 

Cel: (787) 402-5670 

s/Ángel E. Rotger-Sabat 

ÁNGEL E. ROTGER-SABAT 

USDC-PR No.208601 

arotger@scvrlaw.com

COTO & ASSOCIATES

P O Box 71449 

San Juan, P.R. 00936-8549 

Tel: (787) 756-9640 

Fax: (787) 756-9641 

s/Ramón Coto-Ojeda 

RAMON COTO-OJEDA 

USDC-PR No. 202006 

rco@crlawpr.com

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