Ambac Assurance Corp. v. Commonwealth of Puerto Rico

Case Type:
Business
Case Status:
Affirmed
Citation:
18-1214 (1st Circuit, Jun 24,2019) Published
Tag(s):
Ruling:
District Court affirmed.
Procedural context:
Appeal from order dismissing complaint for lack of jurisdiction in the "Title III" court. Left open the possibility that the case could proceed in a bankruptcy court.
Facts:
This is pertains to PROMESA, THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO. Ambac is a financial guaranty insurer and individual holder of Puerto Rico Highways and Transportation Authority (HTA) bonds. In this Title III adversary proceeding arising within HTA's debt-adjustment proceedings pursuant to the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), Ambac brings constitutional and statutory challenges to measures the Commonwealth of Puerto Rico has taken to block payments to holders of HTA bonds. In this Title III adversary proceeding arising within HTA's debt-adjustment proceedings pursuant to the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), Ambac brings constitutional and statutory challenges to measures the Commonwealth of Puerto Rico has taken to block payments to holders of HTA bonds. HTA develops, operates, and maintains Puerto Rico's highways and transportation infrastructure. It has the ability to issue bonds to finance its operations pursuant to the Puerto Rico Highways and Transportation Authority Act, P.R. Laws Ann. tit. 9, § 2012. Ambac, which is both a holder and insurer of the defaulted HTA bonds, commenced this adversary action in the so-called "Title III court," bringing Contracts Clause, Takings Clause, Due Process Clause, preemption, and statutory challenges to the Commonwealth's actions. Ambac asked that court to declare as null the Moratorium Laws and Orders and the Fiscal Plan, and it sought a negative injunction preventing the Commonwealth from continuing to impair the flow of HTA revenues to bondholders. The Title III court carefully reviewed and rejected all of Ambac's requested relief, dismissing the complaint with prejudice. See Ambac Assurance Corp. v. Puerto Rico (In re Fin. Oversight & Mgmt. Bd. for P.R.), 297 F. Supp. 3d 269 (D.P.R. 2018). Ambac then filed this timely appeal.
Judge(s):
Kayatta (Author), Torruella, and Lopez

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