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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

BANKRUPTCY NO. 17-3283

(CIVIL NO. 17-1578)

RE:

Puerto Rico Oversight, 

Management, and Economic 

Stability Act ("PROMESA"), 

Tittle III Petition for 

Adjustment of Debts

MOTION FOR RELIEF FROM STAY

TO THE HONORABLE COURT:

APPEARS NOW the Asociación Puertorriqueña de la Judicatura, Inc. (“APJ”), 

through the undersigned counsel, and hereby states, alleges, and requests as follows:

I. PRELIMINARY STATEMENT

Judicial independence is critical to democracy and justice. The concept of an 

independent judiciary was embedded into the United States Constitution by our Founding 

In re: 

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO 

RICO, as representative of the 

COMMONWEALTH OF PUERTO RICO,

Debtor.

________________________________________________________

ASOCIACIÓN PUERTORRIQUEÑA DE LA 

JUDICATURA, INC.,

Movant,

v.

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO 

RICO,

as representative of the

COMMONWEALTH OF PUERTO RICO,

Respondent.

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Fathers. Any attempt to impinge judicial independence does violence to this core value 

that is fundamental to our form of government. 

Each co-equal branch in the American system of government has its own unique role 

within the overall structure. As Alexander Hamilton so aptly put it: the Judiciary is the 

branch least able to defend itself and advocate for its rights and proper place in the

constitutional structure. Specifically, he wrote about the importance of preserving judicial 

independence in Federalist Paper Number 78: 

Whoever attentively considers the different departments of power 

must perceive, that, in a government in which they are separated from 

each other, the judiciary, from the nature of its functions, will always 

be the least dangerous to the political right of the Constitution; 

because it will be least in a capacity to annoy or injure them. [. . .] 

This simple view of the matter suggests several important 

consequences. It proves incontestably, that the judiciary is beyond 

comparison the weakest of the three departments of power; that it can 

never attack with success either of the other two; and that all possible 

care is requisite to enable it to defend itself against their attacks. [. . .] 

And it proves, in the last place [. . .] that as, from the natural 

feebleness of the judiciary, it is in continual jeopardy of being 

overpowered, awed, or influenced by its co-ordinate branches; and 

that as nothing can contribute so much to its firmness and 

independence as permanency in office, this quality may therefore be 

justly regarded as an indispensable ingredient in its constitution, and, 

in a great measure, as the citadel of the public justice and the public 

security. The Federalist Papers, Mentor, 1961, pages 465-466.

Hamilton also wrote in Federalist Paper Number 79 that: “Next to permanency in 

office, nothing can contribute more to the independence of the judges than a fixed 

provision for their support [. . .] In the general course of human nature, a power over a 

man’s subsistence amounts to a power of his will.” The Federalist No. 79, at 400.

It was the view of Alexander Hamilton, shared by others such as James Madison, 

that the judiciary should be separate and co-equal to the other branches of government, 

which led to the incorporation of the “No-Diminution Clause” in Article III, Section 1 of 

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the the United States Constitution. Essentially, it places the judiciary members’ 

remuneration, once established, out of reach from the other two branches of government 

for purposes of reduction. This provides a guarantee that judicial power will be exercised 

objectively, without seeking favor or for fear of retribution from the executive or 

legislative branch. (See DePascale v. State of New Jersey, 211 N.J. 40 (2012) at 49-50.) 

This approach to judicial independence and a bona fide separation of powers between 

the three branches of government was made a part of Puerto Rico’s trajectory when 

Congress allowed the Puerto Rican people to draft their own Constitution and “organize a 

government pursuant to a Constitution of their own adoption.” Act of July 3, 1950, 

Section 1. 64 Stat. 319. Congress enacted Public Law 600 in 1950 to allow for this, and 

the constitution that would arise under it had to “provide a republican form of 

government” and “include a bill of rights”, with all other matters to be agreed upon in a 

constitutional convention. See Act of July 3, 1950, Section 2, 64 Stat. 319. The document 

that eventually was born from this, the Puerto Rico Constitution, created the 

Commonwealth of Puerto Rico, whose three-branched government resounded of 

American founding principles. See Puerto Rico v. Sánchez Valle, 136 S.Ct. 1863, at 1869 

(2016).

In Booth v. United States, 291 U.S. 339 (1934), the United States Supreme Court was 

faced with the question of whether a judge who was retiring under section 260 of the 

Judicial Code continued to have a vested interest in his compensation sufficient to merit 

protection under the Compensation Clause. The Court found that in situations such as 

that, the judge “does not relinquish his office” and as such, his salary must remain intact. 

It is clear that “compensation” was construed in this case to include pensions, and that 

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upon retirement, a judge is entitled to receive a pension commensurate with what had 

been fixed by law prior to his retirement. 

On May 3rd, 2017 the Asociación Puertorriqueña de la Judicatura, Inc. filed a 

Complaint for Declaratory Judgment (DN 1), closely followed by an Amended 

Complaint for Declaratory Judgment (DN 2) against the Financial Oversight and 

Management Board for Puerto Rico, et als, Civil No. 17-1580. In essence, the Asociación 

Puertorriqueña de la Judicatura (hereinafter “APJ”) submits that the Fiscal Plan that the 

Oversight Board insists that the Government of Puerto Rico adopt is an outright violation 

of Brau Linares v. E.L.A., 190 D.P.R. 315 (2014) as well as the United States and Puerto 

Rico Constitutions because it purports to reduce judicial pensions. Brau Linares, Id held 

that the judicial independence concept in the “non-reduction clauses” applies to judicial 

pensions. The APJ is seeking Declaratory Judgment to the effect that the Oversight Board 

acted ultra vires in mandating a retroactive reduction in the pensions of the Puerto Rico 

Judiciary. 

The automatic stay that was issued in case 17 BK 3283 – LTS, In re: The Financial 

Oversight Management Board for Puerto Rico as representative of the Commonwealth of 

Puerto Rico was extended to this case. For the reasons that will be fully set forth below, 

the APJ requests the automatic stay be lifted with regards to its case. 

II. STATEMENT OF FACTS

The APJ is a membership association comprised by acting and retired judges of 

Puerto Rico’s judicial branch. (See DN 2 Amended Complaint Civil No. 17-1580 at par. 

7). One of its core values is judicial independence and its protection given its vital 

importance to a republican form of government. The Oversight Board (hereinafter “OB”), 

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on the other hand, was designed to, among other things, devise a timeline for the process 

of development, submission, approval, and certification of Fiscal Plans for the 

Commonwealth and any covered territorial instrumentalities. (See DN 2 Amended 

Complaint Civil No. 17-1580 at par. 14). 

In 2016, the OB recommended an amendment of the government-proposed draft 

Fiscal Plan that to reduce pensions by fiscal year 2020. Among these pensions were the 

judicial branch pensions. Specifically, the OB provided that the public pension systems, 

jointly, would absorb a progressive reduction of their outlays by the year 2020 and 

conditioned its approval of the Fiscal Plan for Puerto Rico on this measure, among other 

unrelated ones.

The OB noted that the public pension systems are composed of: Employees’ 

Retirement System (ERS), Teachers Retirement System (TRS), and Judiciary Retirement 

System (JRS). The JRS is completely different from the TRS and the ERS because of its 

origin in the principle of separation of powers, emanating from the United States and 

Puerto Rico Constitutions, Public Laws 600 and 447. By directing the reduction of 

judicial pensions, the OB is directly violating Federal and State law. At no time during 

this process has the OB made mention of the constitutional requirement of protection of 

judiciary salaries and pensions based on separation of powers in the republican form of 

government. 

These actions by the OB constitute a direct violation of the Congressional 

requirement of a republican form of government in Puerto Rico because they violate the 

principle of judicial independence and separation of powers. 

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After all, in the Sánchez Valle, supra case, the United States Supreme Court has 

stated that all sovereignty of Puerto Rico derives from the Federal Constitution. When 

determining whether Puerto Rico and the United States could prosecute one defendant for 

the same conduct, the United States Supreme Court held that they could not, “because the 

oldest roots of Puerto Rico’s power to prosecute lie in federal soil.” Sánchez Valle, 136 

S.Ct at 1868 (2016). The Court explained that “Puerto Rico today has a distinctive, 

indeed exceptional, status as a self-governing Commonwealth. But our approach is 

historical. And if we go back as far as our doctrine demands – to the ‘ultimate source’ of 

Puerto Rico’s prosecutorial power [. . .] we once again discover the U.S. Congress.” 

Sánchez Valle, Id at 1874. 

Put simply, Congress conferred the authority to create the Puerto 

Rico Constitution, which in turn confers the authority to bring 

criminal charges. That makes Congress the original source of power 

for Puerto Rico’s prosecutors- as it is for the Federal Government’s. 

The island’s Constitution, significant though it is, does not break the 

chain. Sánchez Valle, Id at 1875-1876.

Logically, the Puerto Rico Constitution, a creature of Congress, emanates from the 

mandates of the United States Constitution, and embodies the mandates and rights 

established by it. 

The aforementioned actions by the OB dramatically overstep federal law as well; 

specifically, Public Laws 600 and 447 and go against Congressional authority to allow 

for separation of powers and judicial independence in Puerto Rico. 

Additionally, the Puerto Rico Constitution recognizes administrative autonomy and 

independence of the Judicial Branch, as does the United States’ Constitution. (See DN 2 

Amended Complaint Civil No. 17-1580 at par. 46; see also Brau Linares v. E.L.A., 109 

D.P.R. 315, 345 (2014).) Like the United States Constitution from which its power 

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derives, under the Territorial Clause, the Puerto Rico Constitution also recognizes that the 

salaries of appointed judges are to be set by special law and not reduced during the length 

of the term of their appointment (See Art. VI, Sec. 11 of the Puerto Rico Constitution), 

that no law shall reduce the salaries of a public officer after their election or appointment 

(See Art. VI, Sec. 10 of the Puerto Rico Constitution), and that the Legislature will 

establish a mandatory retirement plan for judiciary members upon reaching the age of 

seventy (70) (See Art. VI, Sec. 10 of the Puerto Rico Constitution).

The Puerto Rico Supreme Court in Brau, Linares v. ELA, 190 D.P.R. 315 (2014) has 

explicitly established this. It held that judicial compensation includes pensions, and that 

neither salaries nor pensions may be reduced retroactively.

Additionally, the OB has repeatedly reiterated the demand that a freeze clause be 

implemented on the judiciary pension accrual. This affects the active judges’ pensions 

dramatically. The freeze, as stated in the certified Fiscal Plan, takes away the pension in 

its entirety for some active judges. Moreover, the elimination of the Christmas bonus for 

all public employees is also contemplated. 

The APJ has been in constant communication with the OB and its legal counsel in an 

attempt to kick-start good-faith negotiations on these issues and avoid litigation 

altogether. The first encounter took place on May 16th, 2017, when the undersigned met 

with legal counsel for the OB, AAFAF, and the Commonwealth. This evolved into a 

second meeting on May 24th, 2017 with legal counsel for the OB and AAFAF. Mediation 

on this matter began and the undersigned met with Chief Mediator Hon. Judge Barbara 

Houser on August 11th, 2017 and then again on February 7th, 2018. Following the 

February 7th, 2018 meeting with Judge Houser, the undersigned reached out directly to 

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the OB’s legal counsel in an attempt to begin negotiations. On May 3rd, 2018, and later on 

June 7th, 2018, the undersigned met with legal counsel for the OB and made earnest 

efforts to continue negotiations with the OB on this matter, to no avail.

The parties even filed a Notice of Presentment of Stipulation and Request for Court 

Approval (DN 327) with the corresponding Stipulation and Request for Approval (DN 

327-1) as an exhibit. The parties stipulated two main points: 1) that during the time that 

negotiations were ongoing, APJ would “voluntarily refrain from filing a motion to lift the 

stay as a sign of good faith to encourage ongoing negotiations.” (Stipulation and Request 

for Approval (DN 327-1 at par. 10); and 2) that:

[A]t the time that, and if at all, the current negotiations are 

deemed unsuccessfully terminated by the parties, and this Honorable 

Court is so informed by joint or separate motion to that effect, in 

defending any position presented by the APJ before this Honorable 

Court in case number 17-1578 or 17-1580 and/or any other 

proceeding related to the matters in the identified cases, the FOMB 

and AAFAF will not present any defense or defenses the basis of 

which is the failure by the APJ to act in any manner during the time 

that the conversations are ongoing. (Stipulation and Request for 

Approval (DN 327-1 at par. 11);

To date, the OB has effectively indicated to the APJ that they will not mediate this 

issue now, more than one and a half years after the initial complaint was filed in this case. 

Proceedings are at a standstill and the Judicial Retirement System is in peril with every 

moment that passes without the issue of this Declaratory Judgment being able to be 

resolved by the Court.

III. ARGUMENT

“The decision of whether to lift the stay [is committed] to the discretion of the 

bankruptcy judge.” In re Sonnax Industries, Inc., 907 F.2d 1280 (2d Cir 1990) citing 

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Holdtamp v. Littlefield, (In re Holtkamp), 669 F.2d 505, 507 (7th Cir. 1982); Rich v. 

Maryland National Bank, 42 B.R. 350, 354 (D.Md. 1984). 

a. CAUSE

This Honorable Court has jurisdiction to entertain and grant the request made in 

this Motion pursuant to 11 U.S.C. 362(d)(1), which the Puerto Rico Oversight, 

Management, and Economic Stability Act of 2016 (PROMESA), 48 U.S.C. 2161, has 

made applicable to this proceeding. The Bankruptcy Code at 11 U.S.C. 362(d)(1) 

specifically states that “[o]n request of a party in interest and after notice and a hearing, 

the court shall grant relief from the stay [. . .] (1) for cause, including the lack of adequate 

protection of an interest in property of such party in interest; [. . .]” 

“The question of what is cause [. . .] is developed primarily by case law”. In re 

Unanue-Casal, 159 B.R. 90, 96 (D.P.R. 1993). The movant of a motion requesting lifting 

of a stay has the burden of proof, as explained by the Second Circuit in In re Sonnax 

Industries, Inc., 907 F.2d 1280 (2d Cir 1990). The Sonnax Court acknowledges that the 

term “cause” as set forth in 11 U.S.C. 362(d)(1) is a broad and general one, and suggests 

that the legislative intent is that each case should be evaluated individually to determine 

whether the remedy of lifting the stay is appropriate to that particular set of 

circumstances. 

“Because the Bankruptcy Code provides no definition of what constitutes ‘cause’, 

the courts must determine when discretionary relief is appropriate on a case-by-case 

basis.” Claughton v. Mixton, 33 F.3d 4, 5 (4th Cir. 1994) citing Robbins v. Robbins (In re 

Robbins), 964 F.2d 342, 345 (4th Cir. 1992). 

b. FACTORS TO EVALUATE

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The Sonnax Court also adopts the Curtis1 factors for determining whether or not a 

stay should be lifted to allow litigation of the matter that has been paralyzed by the filing 

of an alternate bankruptcy proceeding. Sonnax, Id at 1286. These factors are: 

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;

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

Sonnax, Id

Referencing this list of factors, the Second Circuit stated that “not all of these factors 

will be relevant in every case.” Mazzeo v. Lenhart (In re Mazzeo), 167 F.3d 139, 143 (2d 

Cir. 1999). The Sonnax Court suggested that this list is not one that all cases must ascribe 

to, and that a particular case does not have to meet all twelve factors. Rather, the Court 

selected several factors that it understood were applicable to that particular case and 

conducted the evaluation of whether or not to grant the stay based on those. This was 

supported by the Court in In re Unanue-Casal, 159 B.R. 90 (D. P.R. 1993) when it stated 

that “[t]he moving party [. . .] need not prove a plurality of Curtis factors or any other 

																																																							 1 In re Curtis, 40 B.R. 795 (Bankr.D.Utah 1984). 

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factors before it has shown cause existed for lifting the stay. Generally, courts have relied 

on only a few factors, and one court has used only one non-Curtis factor, to determine 

that sufficient cause existed to lift the stay.” Unanue, Id at 96.

“Cause may exist for lifting the stay whenever the stay harms the creditor and lifting 

the stay will not unduly harm the debtor.” In re Turner, 161 B.R. 1, 3 (Bankr. D. Me. 

1993). “Even a slight probability of success on the merits may be sufficient to support 

lifting an automatic stay in an appropriate case.” In re Tribune Co., 418 B.R. 116, 129 

(Bankr. D. Del. 2009). 

“The Court’s ultimate task is to perform a careful balancing of the equities involved. 

It must assess the hardships realistically borne by plaintiffs if their requested relief is 

denied and determine whether those outweigh the harm likely to be visited upon the 

Commonwealth defendants if that relief is granted.” Brigade Leveraged Capital 

Structures Fund Ltd. v. Alejandro García Padilla, et al, 217 F.Supp.3d 508, 518-519 (1st

Cir. 2016). 

c. APPLICATION OF FACTS TO OUR CASE

This Honorable Court has discretion in evaluating whether the stay should be lifted 

here. It need not interpret the full list of Curtis factors as set forth in the In re: Sonnax, 

supra case. In the case of the Asociación Puertorriqueña de la Judicatura, the Curtis 

factors that weigh heavily in favor of lifting the stay are: (1) Whether relief would result 

in a partial or complete resolution of the issues; (2) The interests of judicial economy and 

the expeditious and economical resolution of litigation; (3) Whether the parties are ready 

for trial in the other proceeding; (4) Impact on the stay on the parties and the balance of 

harms. We will proceed to discuss each one individually. 

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i. Whether relief would result in a partial or complete resolution 

of the issues

The APJ has requested Declaratory Judgment be issued on the matter of the OB’s 

acts as contrary to the principles of judicial independence. Lifting the stay in Civil No. 

17-1580 will result in a complete resolution of the issues because it will allow the District 

Court to hear the parties on their respective sides of this matter and facilitate judicial 

interpretation of the relevant facts and case law to come to a final conclusion. The

interpretation that the Honorable District Court for the District of Puerto Rico will make 

of the OB’s acts, in conjunction with the reasoning contained in Brau Linares, supra, will 

dispose completely of the issue at bar. Thus, this factor is one that this Honorable Court 

should consider in analyzing whether the lifting of the stay is appropriate here. 

ii. The interest of judicial economy and the expeditious and 

economical resolution of litigation

Lifting the stay in this matter favors the interest of judicial economy and 

expedient resolution of the litigation because it would allow the parties to present their 

case to the District Court to evaluate and make a ruling on Declaratory Judgment versus 

continuing to employ judicial resources in fruitless meetings and negotiations. Moreover, 

resolving this issue now will avoid more contentious litigation down the line because the 

matter can be decided once and for all before the Fiscal Plan is certified and in full effect.

The reason for that is if the Court makes a ruling on Declaratory Judgment, the OB will 

have a clear directive as to what it can or cannot do regarding judicial pensions and 

additional benefits. The District Court should be given the opportunity to hear this matter 

in the least amount of time possible, and lifting the stay in this matter will provide that 

opportunity. 

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iii. Whether the parties are ready for trial in the other proceeding

The parties are ready to proceed to trial in the other proceeding because little to

no discovery is warranted in this Declaratory Judgment action. The District Court must 

make a ruling based on the interpretation of Brau Linares, supra, the Puerto Rico and 

United States Constitutions, and the acts of the OB as detailed by public record. If the 

stay were lifted in this case, the parties would be ready to proceed with presenting their 

sides to the Honorable District Court, who would, in turn, issue Declaratory Judgment on 

the issues. 

iv. Impact on the stay on the parties and the balance of harms

The stay is detrimental to the members of APJ and the entire Puerto Rico Judiciary 

because as long as the matter of whether the acts of the OB in reducing judiciary pensions 

is contrary to constitutional directives and judicial precedent is resolved, the OB can 

essentially continue to affect the emoluments that members of the Puerto Rico Judicial 

Branch receive and have had a right to for decades. Moreover, the longer that the stay is 

in place with regards to this matter, the more danger the judiciary pensions are in, since a 

Fiscal Plan can be certified at any time and include the judiciary pension reduction, 

judiciary pension freeze, and judiciary Christmas bonus elimination without a firm 

interpretation and ruling by the District Court on whether those acts are, in fact, allowed. 

The harm to APJ’s membership is evident in the fact that many of them will immediately 

begin receiving dramatically reduced pensions. This hardship is direct; it is not collateral. 

On the other hand, lifting the stay would not be detrimental to the OB and 

Commonwealth because the Judiciary represents a minimal percentage in the grander 

scheme of the Puerto Rico Retirement System. Were the District Court rule that the OB’s 

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acts in including the reduction of judicial pensions is contrary to constitutional mandate 

and legal precedent, the impact it would have on the OB’s Fiscal Plan is a minimal 

percentage of projected savings in the Retirement System area. Moreover, should the stay 

be lifted, the OB would be benefited by a clear directive on what it can and cannot do 

with regards to the Puerto Rico judiciary. 

When these impacts are placed on the balance of justice, it is clear to see that the 

members of the Puerto Rico Judicial Branch would be more affected by the stay 

remaining in place than lifting the stay would have on the OB and the Commonwealth. 

The danger of essentially losing their retirement benefits weighs heavily on the minds of 

the Puerto Rican judges, and should weigh heavily in favor of lifting the stay in this case. 

IV. CONCLUSION

The Puerto Rico Judicial Retirement System is in danger of being severely affected 

by the acts of the OB. Including the judicial pensions in the reduction plan to allow for 

savings goes against the principle of judicial independence. How can a judge rule 

impartially when their compensation is being threatened? That is the essence behind this 

case. The APJ does not seek declaratory relief regarding a threatened governmental 

action, but rather regarding an action which course is certain. 

Lifting the stay will assist in the resolution of this issue: it will allow the District 

Court to interpret, once and for all, whether the Oversight Board’s actions in proposing a 

reduction of judicial retirement benefits goes against the Constitution and judicial 

precedent. This matter meets four of the In re: Sonnax factors mentioned above, and thus, 

the stay should be lifted to allow this matter to go forward. 

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WHEREFORE, APJ, on behalf of and for its members, respectfully requests this 

Honorable Court GRANT relief from the automatic stay, allowing APJ to continue its 

Declaratory Judgment action Civil No. 17-1580 currently pending in the District Court. 

CERTIFICATE OF SERVICE: I HEREBY CERTIFY that on this day, I 

electronically filed the foregoing motion with the Clerk of the Court using CM/ECF 

Filing System which will send notification to the parties and subscribed users. 

RESPECTFULLY SUBMITTED.

In San Juan, Puerto Rico, this 6th day of November, 2018.

INDIANO & WILLIAMS, P.S.C.

207 del Parque Street; 3rd Floor

San Juan, P.R. 00912

Tel: (787) 641-4545; Fax: (787) 641-4544

david.indiano@indianowilliams.com

jeffrey.williams@indianowilliams.com

by: s/ David C. Indiano

DAVID C. INDIANO

USDC-PR NO. 200601

by: s/ Jeffrey M. Williams

 JEFFREY M. WILLIAMS

 USDC-PR No. 202414

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