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:

NOW COME Migdalia Rivera López and Luis Colón Larrauri (“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, state 

and pray:

I. PROCEDURAL BACKGROUND

Movants, Migdalia Rivera López and Luis Colón Larrauri filed a complaint 

against several parties, including the Commonwealth of Puerto Rico, alleging 

damages due to a trip and fall occurred in the Commonwealth’s and other’s property. 

The complaint was filed under Article 1802 of the Puerto Rico Civil Code of 1930, 31 

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

Commonwealth-Authorization.

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The case was filed on June 23, 2020, and is captioned Migdalia Rivera López, 

et. al. v. Municipality of San Juan, et. als., case number SJ2020CV03308, before the 

Puerto Rico Court of First Instance in San Juan, seeking monetary compensation for 

the damages suffered due to a fall Migdalia Rivera sustained on June 24, 2019. In 

said complaint, movants alleged that while Migdalia Rivera was walking on a 

sidewalk property of the Municipality of San Juan and/or the Commonwealth of 

Puerto Rico, or where one or the other has the duty to maintain the sidewalk, she had

a fall when one of her feet went down through an uncovered junction box, suffering 

multiple body traumas. It is movants’ contention that both the Municipality of San 

Juan and the Commonwealth of Puerto Rico are jointly liable for the damages she 

suffered. Her common law husband, Mr. Colón, claims for the mental anguish he 

suffered as a result. Movants claimed in excess of $254,000.00 against all defendants.

II. Discussion

Although the complaint was 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 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. See Docket No. 19813. 

Particularly, subsection 59 of the Plan of Adjustment states:

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“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 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 

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interpose an objection or other defense to the allowance or payment 

thereof.”

Pursuant to said Order and to the Plan of Adjustment, on April 12, 2022, the 

Commonwealth of Puerto Rico filed a Notice of Injunction, which was granted by the 

Superior Court and the case was stayed.

On October 20, 2022, this Honorable Court entered “Order Extending 

Administrative Claim Bar Date for Certain Parties and Modifying Discharge 

Injunction”. See Docket No. 22650.

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 a motion to reopen their litigation. The 

Commonwealth of Puerto Rico filed its opposition on the grounds that the complaint 

demanded monetary compensation above the statutory limitation of $150,000, 

contrary to the provisions of subsection (v) of the October 20, 2022, Order.

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Movants alleged that the reason why the complaint demanded amounts of 

money beyond the statutory limits is due to the fact that other defendants were 

named and/or involved in the lawsuit. 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 would never have to pay 

any sum beyond the statutory limits if a judgment was to be entered against it. (See, 

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

The Superior Court granted movants’ request to reopen the case. However,

there is aa appeal pending by the Commonwealth before the Court of Appeals because 

the Superior Court lacked jurisdiction at the time it issued the order reopening the 

case since the mandate from the Court of Appeals had not been made. The 

Commonwealth has also stated that if the Superior Court, once it receives the 

mandate from the Court of Appeals, issues another order reopening the case, it will 

contest that order before the Court of Appeals. Therefore, movants think it is 

necessary to request the present relief from this Honorable Court, as any decision by 

the local court may be null and void.

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 aforementioned case, 

permitting the litigation 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;

(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

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(12) Impact of the stay on the parties and the balance of harms.

Under Sonnax, supra, this case 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.

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.

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Allowing movants’ litigation to proceed would not interfere with the

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

with respect to movants’ case should be set aside.

Wherefore, it is respectfully requested from this Honorable Court, that the stay 

of captioned case be lifted or modified, allowing the litigation to proceed.

I HEREBY CERTIFY: That on this same date I electronically filed the 

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

notification of such filing to all attorneys of record.

RESPECTFULLY SUBMITTED.

In Caguas, Puerto Rico, this 17th day of August, 2023.

P.O. Box 734

Caguas, PR 00726-0734

Tel. 787-744-7272

Fax 787-744-7277

Email: rvv@vvlo.com

s/ Rafael J. Velázquez Villares_______

RAFAEL J. VELÁZQUEZ VILLARES

USDC 214302

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