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SETTLEMENT AND RELEASE .AGREEMENT 

This Settlement and Release Agreement ("Agreement") is made by, between, and among 

the following undersigned parties: 

The Plaintiff-Intervenor Federal Deposit Insurance Corporation as Receiver for Doral 

Bank ("FDIC-R"); and 

Defendants Echandi, Guzman & Associates, Inc., and Efrain Echandi Otero (collectively, 

the "Engineer Defendants"); and 

Defendants Nydia Rosa Guzman Colon, and the Conjugal Partnership of Efrain Echandi 

Otero and Nydia Rosa Guzman Col6n ( coJiectively, the "Spouse Defendants"); and 

Defendant ACE Insurance Company, presently named Chubb Insurance Company of 

Puerto Rico ("Insurer''). 

Co1lectively, the Engineer Defendants, the Spouse Defendants, and the Insurer arc 

referred to herein as the "Settling Defendants." The FDIC-Rand the Settling Defendants may be 

individually referred to herein as "Party" and collectively as the "Parties." 

RECITALS 

WHEREAS: 

Prior to February 27, 2015, Doral Bank ("Bank") was a depository institution organized 

and existing under the laws of the Commonwealth of Puerto Rico~ 

On February 27, 2015, the Commissioner of Financial Institutions of Puerto Rico closed 

the Bank and pursuant to 12 U.S.C. § 1821(c), the Federal Deposit Insurance Corporation was 

appointed Receiver. In accordance with 12 U.S.C. § 182l(d), the FDIC-R succeeded to all 

rights, titles, powers and privileges of the Bank, including those with respect to its assets; 

Among the assets to which the FDIC-R succeeded were all of the Bank's claims, 

demands, and causes of action against engineers and other professionals arising from the 

performance, nonperformance, and manner of performance of their contractual and professional 

functions, duties and acts owed to the Bank; 
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On October 7, 2009, the Bank instituted the Action (as defined below) by filing a 

complaint for money damages against the Settling Defendants in the Court of First Instance, San 

Juan Division, Commonwealth of Puerto Rico, and on February 11, 2010, the Engineer 

Defendants filed a counterclaim for money damages against the Bank in the lawsuit in the Court 

of First Instance, San Juan Division, Commonwealth of Puerto Rico. On December 16, 2015, 

the FDIC-R intervened in and removed the state court lawsuit to federal court. Those claims for 

damages are now pending in the United States District Court for the District of Puerto Rico in 

FDIC as Receiver for Doral Bank v. Rchandi, Guzman & Associates, Inc., et al., Case No. 3: l 5-

cv-03090-CCC ("Action"). The Settling Defendants have denied liability in the Action, and the 

FDIC-R has denied liability for the counterclaim against the Bank in the Action. 

Insurer issued a professional liability policy numbered[3-for-1he_peri.od-Aptil22,-~(4

l __ 

2009, to April 27, 2010 ("Policy"), which insured the Engineer Defendants and the Spouse 

Defendants according to the tenns, provisions, and conditions of the Policy. The Engineer · 

Defendants and the Spouse Defendants asserted claims for coverage under the Policy. Insurer 

has reserved its rights to deny coverage under the Policy for cJajms asse11ed by FDIC-R against 

the Engineer Defendants and the Spouse Defendants. 

This Agreement is entered into by and among the Parties. each represented by their 

respective counsels. The Parties have agreed to settle all matters pending in the Action in the 

interests of justice without conceding or admitting liability, negligence, or error by any Party. 

The undersigned Parties deem it in their best interests to enter into this Agreement to avoid the 

uncertainty and expense of further litigation. 

NOW, THEREFORE, in consideration of the promises, undertakings, payments, and 

releases stated het'ein, the sufficiency of which consideration is hereby acknowledged, the 

undersigned Parties agree, each with the other, as follows: 

SECTION I: Payment to FDIC-R 

A. As an essential covenant and condition to this Agreement, on or before thirty (30) 

calendar days fo1Iowing the later of the date the FDIC-R executes this Agreement or the date the 

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Engineer Defendants execute this Agreement, the Insurer agrees to pay the FDf C-R the full sum 

of$100,000,00 ("the Settlement Payment") without any contribution from any of the Engineer 

Defendants or Spouse Defendants. The responsibility for the payment of the settlement amounts 

will be exclusively of the Insurer, who directly negotiated the agreement with the FDIC-R with 

the consent of the Engineer Defendants and Spouse Defendants. 

B. The Insurer shall de]iver the Settlement Payment to the FDIC-R by direct wire 

transfer into an account designated by FDIC-R by notice to the attorneys for the Insurer or by 

certified or cashier's check drawn upon a depository institution acceptable to FDJC-R 

In the event that the Settlement Payment is not delivered to the FDICwR (or its counsel) 

by the date determined by Subsection A above, interest shall accrue on aH unpaid amounts at the 

rate of 5% per annum from the date detennined by Subsection A above until the date of payment. 

However, if said Settlement Payment is not delivered to the FDIC-R by the date determined by 

Subsection A above as a result of the FDIC-R>s failure to execute this Agreement, no interest 

shall accrue until five days after the FDICwR executes the Agreement. 

C. If the FDIC-R does not receive the Settlement Payment in furl on or before the 

date determined by subsection A above, then the FDIC-R> in its sole discretion, shall have the 

right at any time prior to receipt of the Settlement Payment in full (including all accrued interest) 

to: 

1. Extend the period of time for the Settlement Payment, including interest 

accruing from the date determined by subsection A above, through the date of payment at a rate 

calculated in accordance with 26 U.S.C. § 6621(a)(2); or 

2. Enforce this Agreement, in which event the Settling Defendants agree to 

jurisdiction in United States District Court in Puerto Rico and to pay all of the FDIC-R's 

reasonable attorney's fees and costs expended in enforcing the terms of this Agreement; or 

3. Terminate the Agreement, move to vacate any dismissal order, to which 

the Settling Defendants agree to consent, and re-institute an action on the FDIC-R,s claims. The 

Settling Defendants further agree to waive any defense based on any statute of limitations that 

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would bar any of the FDIC-R~s claims and waive all objections, defenses, claims or 

counterclaims, and covenant and agree not to assert any objections, defenses, claims or 

counterclaims that did not exist or were otherwise unavailable as of the date this Agreement was 

fu11y executed; and/or 

4. Seek any other relief available to it in law or equity. 

Any extension of time under Section I.C.1 for delivery of the Settlement Payment or 

acceptance of a portion of the Settlement Payment shall not prejudice the FDIC-R's rights to take 

any of the actions set forth in Section I.C.2 through I.C.4 at any time prior to receipt of the 

Settlement Payment (including all accrued interest) in full. 

SECTION II: Stipulation and Dismissal 

Within ten business days after the latter of (1) full execution of this Agreement by all of 

the Parties, and (2) receipt of the Settlement Payment, plus any accrued interest, the FDIC~R and 

the Engineer Defendants shall file a joint stipulation of dismissal with prejudice, executed by the 

attorneys for all Parties hereto, in the form attached hereto as Exhibit A, in the Action. 

SECTION III: Releases 

A. The FDIC-R's Releases. 

Upon receipt of the Settlement Payment in full and except as provided in Section III.D .• 

the FDIC-R, for itself and its successors and assigns, hereby releases and discharges: 

1. The Engineer Defendants, the Spouse Defendants, and their respective 

heirs, executors, trustees, administrators, representatives, attorneys, successors, and assigns, from 

any and all claims, demands, obligations, damages, actions, and causes of action, direct or 

indirect, in law or in equity, belonging to the FDIC-R, including any claim the FDIC-R could 

have asserted against the Engineer Defendants, that arise from or relate to. the perfonnance, 

nonperformance, or manner ofperfonnance of the Engineer Defendants' respective functions, 

duties and acts as professional engineers engaged by the Bank, including without limitation the 

causes of action alleged in the Action, including in the counterclaim. 

2. Insurer, its parents, subsidiaries, affiliates and reinsurers, and their 

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respective employees, officers, directors, agents, representatives, attorneys, successors and 

assigns, from any and all claims, demands, obligations, damages, actions and causes of action, 

direct or indirect, in law or in equity, that arise from or relate to the Policy, the Action. or any 

matter for which the FDIC-R herein releases the Engineer Defendants, including the 

counterclaim. As part of this release of the Insurer, the FDIC~R agrees that any interest it may 

have under the Policy is extinguished. 

B. The Engineer Defendants' and the Spouse Defendants' Release. 

Effective simultaneously with the releases granted in Section III.A. above, the Engineer 

Defendants and the Spouse Defendants, on behalf of themselves individually, and their 

respective heirs, executors, trustees, administrators, agents, representatives, successors, and 

assigns, hereby release and discharge the FDIC-R, and its employees, officers, directors. 

representatives, successors and assigns, from any and all claims, demands, obligations, damages, 

actions, and causes of action, direct or indirect, in law or in equity, that arise from or relate to, 

the Bank, the Bank's filing and prosecution of the Action or the FDIC-R's continuation of the 

Action, or to the performance, nonperformance, or manner of performance of the Engineer 

Defendants' respective functions, duties and acts as professional engineers engaged by the Bank, 

including without limitation the causes of action alleged in the counterclaim or othe1wise alleged 

in the Action. 

C. The Insurer's Release. 

Effective simultaneously with the releases granted in Section III.A. above, Insurer, for 

itself and its successors and assigns, and on behalf of its parents, subsidiaries, affiliates and 

reinsurers, and their successors and assigns, hereby releases and discharges the FDIC-R, and its 

employees, officers, directors, agents, representatives, successors, and assigns, from any and all 

claims, demands, obligations, damages, actions, and causes of action, direct or indirect, in law or 

in equity, that arise from or relate to (a) the Policy; {b) the Action, including the counterclaim; 

and ( c) the facts, circumstances. transactions or events underlying the Action. 

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D. Exceptions from Releases by FDIC-R. 

1. Notwithstanding any other provision of this Agreement, the FDlCM R does 

not release, and expressly preserves fully and to the same extent as if this Agreement had not 

been executed, any claims or causes of action: 

a. Against the Settling Defendants or any other person or entity for 

liability, if any, incurred as the maker, endorser or guarantor of any promissory note or 

instnunent of indebtedness payable or owed by them to the FDIC-R, the Bank, other financial 

institutions, or any other person or entity, including without limitation any such claims acquired 

by FDIC-Ras successor in interest to the Bank or any person or entity other than Bank; and 

b. Against any person or entity not expressly released by the FDICMR 

in this Agreement. 

2. Notwithstanding any other provision of this Agreement, nothing in this 

Agreement shall be construed or interpreted as limiting, waiving, releasing, or compromising the 

jurisdiction and authority of the Federal Deposit Insurance Corporation in the exercise of its 

supervisory or regulatory authority or to diminish its ability to institute administrative 

enforcement or other proceedings seeking removal, prohibition, or any other relief it is 

authorized to seek pursuant to its supervisory or regulatory authority against any person. 

3. Notwithstanding any other provision of this Agreement, this Agreement 

does not purport to waive, or intend to waive, any claims that could be brought by the United 

States through the Department of Justice, the United States Attorney's Office for any federal 

judicial district, or any other department or agency of the United States as defined by 18 U.S.C. § 

6. ln addition, the FOIC~R specifically reserves the right to seek court-ordered restitution 

pursuant to the relevant provisions of the Mandatory Victims Restitution Act, 18 U.S.C. §§ 3322 

and 3663 et seq., if appropriate. 

E. Releases among Settling Defendants. 

Effective simulta11eously with the releases granted in Section III.A. above, the Engineer 

Defendants deem satisfied in full any and aI1 obligations owed by lnsurer to Engineer Defendants 

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as a result of the Action. 

SECTION J.V: Waiver of Dividends and Pl'oceeds from Litigation 

To the extent, if any, that the Engineer Defendants or the Spouse Defendants are or were 

shareholders of the Bank or its holding company and by virtue thereof arc or may be entitled to a 

dividend, payment, or other distribution upon resolution of the receivership of the Bank or 

proceeds in any litigation that has been or could be brought against the Federal Deposit 

Insurance Corporation in any capacity or against the United States based on or arising out of, in 

whole or in part, the closing of the Bank, or any alleged acts or omissions by the Federal Deposit 

Insurance Corporation in any capacity, the United States govemment, or any agency or 

department of the United States government in connection with the Bank, its conservatorship, or 

receivership, the Engineer Defendants and the Spouse Defendants hereby knowingly assign to 

the FDTC-R any and all rights, titles, and interest in and to any and all such dividends, payments, 

or other distributions, or proceeds. 

SECTION V: Representations and Acknowledgements 

A. Authorized Signatories. All of the undersigned persons represent and warrant that 

they are Parties hereto or are authorized to sign this Agreement on behalf of the respective Party, 

and that they have the full power and authority to bind such Party to each and every provision of 

this Agreement. This Agreement shall be binding upon and inure to the benefit of the 

undersigned Parties and their respective heirs, executors, trustees, administrators, representatives, 

successors and assigns. 

B. Advice of Counsel. Each Party hereby acknowledges that he, she, or it has 

consulted with and obtained the advice of counsel prior to executing this Agreement, and that 

this Agreement has been explained to that Party by his or her counsel. 

SECTION VI: Reasonable Cooperation 

A. The Parties agree to cooperate in good faith to effectuate all the tenns and 

conditions of this Agreement, including doing, or causing their agents and attorneys to do, 

whatever is reasonably necessary to effectuate the signing, delivery, execution, filing, recording, 

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and entry. of any documents necessary to conclude the Action, and to otherwise perform the 

terms of this Agreement. 

SECTION VII: Other Matte1·s 

A. No Admission of Liability. The undersigned Parties each acknowledge and agree 

that the matters set forth in this Agreement constitute the settlement and compromise of disputed 

claims and defenses, that this Agreement is not an admission or evidence of liability or infinnity 

by any of them regarding any claim or defense. and that the Agreement shall not be offered or 

received in evidence by or against any Party except to enforce its tenns. 

B. Execution in Counterparts. This Agreement may be executed in counterparts by 

one or more of the Parties and all such counterparts when so executed shall together constitute 

the final Agreement, as if one document had been signed by all Parties; and each such 

counterpart, upon execution and delivery, shall be deemed a complete original, binding the 

Parties subscribed thereto upon the execution by all Parties to this Agreement. 

C. Choice of Law. This Agreement shall be interpreted, construed and enforced 

according to applicable federal law, or in its absence, the laws of the Commonwealth of Puerto 

Rico. 

D. Notices. Any notices required hereunder shall be sent by registered mail. first 

class, return receipt requested. and by email, to the following: 

If to the FDIC-R: 

Richard E. Elsea 

.FDIC Dallas Regional Office 

1601 Bryan Street. 15th Floor 

Dallas, Texas 75201 

Telephone: (972) 761-2847 

--------·------··-··----- En~ _ I 

and 

Manuel :Fernandez-Bared 

Toro, Colon, Mullet, Rivera & Sifre, P.S.C. 

P.O. Box 195383 

San Juan, Puerto Rico 00919-5383 

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Telephone: (787) 751-8999 

________________ Em~._______ I 

and 

James A Brown 

LISKOW & LEWIS, PLC 

One Shell Square 

70 J Poydras Street, Suite 5000 

New Orleans, Louisiana 70139 

Telephone: (504) 581-7979 

___________ Emait!------

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ff to the Engineer Defendants and/or the Spouse Defendants: 

Juan J. Vilella-Janeiro 

VILELLA-JANEIRO LAW OFFICE 

PMB291 

1353 Road 19 

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\ 

\ 

\ 

Guaynabo, Puerto Rico 00966-2700 

Telephone: (787) 781-7777 

-----Rmai-1{--------·· 

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Attorney for Hchandi, Guzman & Associates, Inc., Efi·ain Echandi Otero, Nydiu 

Rosa Guzman Colon, and the Marital Property of Jifrain Hchandi Otero and 

Nydia Rosa Guzman Colon 

If to Insurer: 

Francisco E. Colon-Ramirez 

Col6n & Co16n, P.S.C. 

P.O. Box 9023355 

San Juan, Puerto Rico 00902-3355 

Telephone: (787) 758~6060 

_______________ .Email:-[----·-·-----

E. Entire Agreement and Amendments. This Agreement constitutes the entire 

agreement and understanding between and among the undersigned Pariies concerning the matters 

set forth herein and supersedes any prior agreements or understandings. This A&rreement may 

not be amended or modified, nor may any of its provisions be waived, except in writing signed 

by the Parties bound thereby, or by their respective authorized attorney(s), or other 

representative( s ). 

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F. Titles and Captions. All section titles and captions contained in this Agreement 

are for convenience only and shall not affect the interpretation of this Agreement. 

G. No Confidentiality. The undersigned Pmtics acknowledge that this Agreement 

shall not be confidential and will be disclosed pursuant to the Federal Deposit Insurance 

Corporation's applicable policies, procedures, and other legal requirements. 

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed 

by each of them or their duly authorized representatives on the dates hereinafter subscribed. 

Date: ------

Date: ~ Ac.Re..,. \ 61 

FEDERAL DEPOSIT lNSURANCE CORPORATJ ON AS 

RECEIVER FOR DORAL BANK 

BY: -------------

TITLE: ____________ _ 

PRINT NAME: ---------

ECHANDI, GUZMAN & ASSOCIATES, INC. 

···----- ·-····---·--··-----------------······------~:1 _---~-·~_-_,_,,,-"-':'-'-~-----·-'-·~(12...._-_--_-____ ,. ----~ 

Date: 5 A(?f.2 \1 EFRAIN ECHANDI OTERO 

··-·-·-----··-··-·-----·------

---···t-------··--·----- BY: _._i..-,--,-----------.-----

TITLE: ----------------

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Date:S ~- \'1 NYDIA ROSA GUZMAN COLON 

-----------~~=---.---=~-~--~~--

Date: S ~ \'-1 

/' .,, 

PRINT NAME: \) l.(:l?A Q. ~ Cc:Loμ 

THE MARITAL PROPERTY OF EFRAIN ECHANDI 

OTERO AND NYDIA ROSA GUZMAN COLON 

·--------- ------ -.............. _________________ '--.-----------~---------·----···--··--· ... ---· 

BY: -

·--------·--------~----------- -... _,____ ____ . ._ ____________ .. ___ , __ 

BY: 

------·--·------------------- T ·-----.-----.. --

P AME: -- -, :/ · . "'! __ .·r / ..- .,. r/r 1, '-, • • 

11 

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