United States Court of Appeals For the First Circuit Nos. 18-1579 18-1681 18-1755 MIGUEL ÁNGEL COLÓN-TORRES,
Plaintiff, Appellee,
v.
JOSE R. NEGRÓN-FERNÁNDEZ, Secretary of Corrections of Puerto Rico,
Defendant, Appellant,
COMMONWEALTH OF PUERTO RICO; GLADYS S. QUILES-SANTIAGO, Medical Director of the Bayamón Correctional Facility; FNU PALERMO; FNU LABORDE; WANDA MONTANEZ, Superintendent of the Bayamón Correctional Facility; POLICIA FNU VILLEGAS, Superintendent 501; FNU GUERRERO, Superintendent 501; DR. ALINA PRADERE, Director of Clinical Services for the Bayamón Correctional Facility; CORRECTIONAL HEALTH SERVICES CORP.; JOSE APONTE-CARO; and JOHN DOE
Defendants.
APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO [Hon. Gustavo A. Gelpí, Jr., U.S. District Judge]
Before Howard, Chief Judge, and Barron, Circuit Judge.*
* Judge Torruella heard oral argument in this matter and participated in the semble, but he did not participate in the issuance of the panel's opinion in this case. The remaining two panelists therefore issued the opinion pursuant to 28 U.S.C. § 46(d). Carlos Lugo-Fiol, with whom Isaías Sánchez-Báez, Solicitor General of Puerto Rico, was on brief, for appellant Jose R. Negrón- Fernández. David R. Rodríguez-Burns, with whom Eliezer Aldarondo-Ortiz, Claudio Aliff-Ortiz, Sheila Torres-Delgado, and Aldarondo & López- Bras were on brief, for appellee Miguel Ángel Colón-Torres.
May 10, 2021 HOWARD, Chief Judge. Defendant-Appellant José Negrón-
Fernández ("Negrón"), the Secretary of Corrections of Puerto Rico,
appeals the district court's decision ordering the immediate
payment of $10,000 in settlement money to Plaintiff-Appellee
Miguel Colón-Colón ("Colón").1 The underlying case arises out of
a suit brought by Colón under 42 U.S.C. § 1983 against several
defendants, including Negrón, alleging that the defendants had
been deliberately indifferent to his medical needs while he was an
inmate at the Bayamón Correctional Facility.
The parties eventually settled Colón's § 1983 claim for
$50,000 and notified the district court accordingly.2 Though no
record exists of the exact terms of the settlement agreement, the
parties agree that the settlement required that $40,000 would be
paid by the Correctional Health Services Corporation, a non-profit
corporation in the custody of the Administration of Corrections.
1 Miguel Colón-Colón passed away on May 11, 2018. With our leave, his son and heir, Miguel Ángel Colón-Torres, was substituted as the plaintiff in the district court and as the appellee before us. For the sake of clarity, we will not differentiate between Colón-Colón and Colón-Torres and instead refer to the plaintiff- appellee throughout as "Colón." 2 There is some suggestion in the record that Colón either initially rejected the settlement offer or later sought to repudiate the agreement. The district court denied the plaintiff's request to withdraw from the settlement and instead "enforc[ed] the settlement and . . . enter[ed] judgment accordingly." Colón has not appealed this decision or argued before us that he did not assent to the settlement's terms. Consequently, we presume that Colón agreed to the settlement and proceed accordingly.
- 3 - The Correctional Health Services Corp. did, in fact, pay this
amount.
The parties disagree about who was responsible for
paying the remaining $10,000. Colón insists that, under the
settlement, Negrón was personally liable for this money (though he
would presumably seek indemnification from the Commonwealth of
Puerto Rico), while Negrón argues that only the Commonwealth agreed
to pay this amount. This amount was never paid, and Colón asked
the district court to compel the Commonwealth to pay the remaining
$10,000. The district court granted this motion but ordered
Negrón, not the Commonwealth, to pay the balance of the settlement
amount. Negrón now appeals, arguing that Colón's effort to collect
the remaining $10,000 should have been stayed under the automatic
stay provision of the Puerto Rico Oversight, Management, and
Economic Stability Act ("PROMESA").
We agree with Negrón. In doing so, we acknowledge that
in the background of this case is a difficult issue of first
impression; there is no controlling precedent in this circuit that
speaks to the question of whether a municipality's (or in this
case, the Commonwealth's) agreement to indemnify one of its
officers for violations of an individual's civil rights is
sufficient to trigger the automatic stay with respect to a suit
against that officer in his individual capacity. However, given
the manner in which Colón has styled his effort to recover on the
- 4 - settlement in this case, we need not reach that issue to conclude
that the automatic stay properly applies. We, therefore, vacate
the district court's order requiring immediate payment of the
remaining $10,000 settlement sum by Negrón and remand with
instructions to stay Colón's effort to recover.
I. BACKGROUND
This case involves three consolidated appeals: Nos. 18-
1579, 18-1681, and 18-1755. The factual and procedural history of
each appeal is discussed below.
A. Appeal No. 18-1579
In May 2015, Miguel Colón-Colón, an inmate in Puerto
Rico's Bayamón Correctional Facility, filed the operative Second
Amended Complaint (the "SAC") against several corrections officers
in both their personal and official capacities and against the
Correctional Health Services Corp., alleging violations of his
rights under the Eighth Amendment.3 The SAC did not raise a claim
against the Commonwealth of Puerto Rico, nor was the Commonwealth
brought in as a party to the litigation at any point. However,
the Commonwealth agreed to represent Negrón4 under Puerto Rico's
3 Colón initially brought suit pro se, and counsel was appointed for him. Plaintiff's counsel withdrew shortly after the settlement was reached and successor counsel (who was not involved in the settlement negotiations) litigated the later stages of this case. 4 The Commonwealth also represented Defendant José Aponte- Caro, who was sued in his official capacity as Acting Secretary of
- 5 - Law 9, which permits officials and employees of the Commonwealth
to request the Commonwealth to assume representation and payment
of any judgment entered against them in their personal capacity
for violations of the plaintiff's civil rights. P.R. Laws Ann.
tit. 32, § 3085.
About five months later, in October 2015, Negrón
(represented by counsel from the Puerto Rico Department of Justice)
filed an answer to the SAC. Following a number of proceedings
that spanned the better part of two years -- the details of which
do not affect this appeal -- the parties attended a settlement
conference before a magistrate judge in March 2017. The transcript
of this conference is neither included in the appellate record nor
otherwise available. Following the conference, Colón filed an
informative motion indicating "that he has accepted the $50,000.00
settlement offer tendered by the defendants."
Without describing or otherwise clarifying the terms of
the settlement, the district court issued an order on April 19,
2017, "inform[ing] the parties that it is enforcing the settlement
and will enter judgment accordingly." It subsequently entered a
judgment stating the following: "Pursuant to the Court's Order at
the Puerto Rico Department of Corrections. Though at least one other defendant was explicitly sued in her personal capacity, it appears as if Negrón was the only state official represented personally by the Commonwealth under Law 9. The other named defendants are not parties to this appeal.
- 6 - Docket No. 143, judgment is entered as follows. Defendants shall
pay plaintiff the sum of $50,000.00 within ninety days of entry of
judgment as per the settlement terms. All claims are hereby
DISMISSED with prejudice." (emphasis added).
Up until this point, there was no mention in the record
of the Commonwealth's responsibility to pay a portion of the
settlement; there was no indication that the Commonwealth
participated in the settlement conference or otherwise was a party
to the agreement. The first indication that the Commonwealth had
agreed to pay part of the judgment under the actual terms of the
settlement was in the Correctional Health Services Corp.'s motion
to consign settlement funds. The motion stated that the
Correctional Health Services Corp. "agreed to pay the sum of
$40,000, the Commonwealth of Puerto Rico will pay the remaining
$10,000."
At the center of this appeal is that $10,000 balance,
which, according to Negrón, the parties had agreed would be paid
by the Commonwealth. After judgment in this case had been entered,
but before the Correctional Health Services Corp. paid $40,000
toward satisfaction of the judgment, the Financial Oversight and
Management Board ("FOMB") filed a petition for bankruptcy relief
on behalf of the Commonwealth under Title III of PROMESA. On
September 1, 2017, the Puerto Rico Department of Justice, on behalf
of Negrón, filed an informative motion in this case informing the
- 7 - district court that there was a pending Title III petition under
PROMESA, which operates as an automatic stay of collection actions
against the Commonwealth. The district court issued a minute order
shortly thereafter, "not[ing]" this informative motion without
further comment.
On February 13, 2018, Colón moved to compel the payment
of the remaining $10,000 of settlement proceeds by the
Commonwealth. In that motion, he made no mention of Negrón.
Instead, Colón asserted that "the sum of $10,000.00 remain[ed] to
be paid by the Commonwealth" and sought an order from the district
court "requiring the Commonwealth . . . [to pay] the settlement
proceeds, within a reasonable period not to exceed thirty (30)
days."
The district court granted the motion but ordered
Negrón, rather than the Commonwealth, to pay the $10,000 within
one month. Negrón sought reconsideration of this order, arguing
that Colón's collection effort was subject to the automatic stay
under PROMESA. The district court denied the motion on the grounds
that "[Negrón]'s indemnification agreement under Law 9 is between
[Negrón] and the Commonwealth, not Plaintiff and the
Commonwealth." Because Negrón, not the Commonwealth, was the
defendant in this case, the district court concluded that the
settlement agreement permitted Colón to recover from Negrón
personally and that any effort to do so could not properly be
- 8 - construed as a collection action against the Commonwealth. Negrón
then filed a second motion for reconsideration, largely on the
same grounds, which was also denied.
Later, the district court sua sponte entered an order in
which it revised its denial of Negrón's motion for reconsideration
to add that "the Commonwealth, in another settlement . . . has in
fact opted to pay the settlement amount, contrary to the case at
bar." Negrón objected to this order, but the district court
overruled his objections. Negrón appealed, challenging the
district court's order requiring immediate payment of the $10,000
settlement balance, its denial of reconsideration, and its
subsequent revision to these orders. This Notice of Appeal gave
rise to Appeal No. 18-1579.
B. Appeal No. 18-1681
On June 18, 2018, about two weeks after the Notice of
Appeal was filed for Appeal No. 18-1579, Colón moved to compel the
Puerto Rico Department of Justice to provide the following
information:
i. a list of all civil cases before the U.S. District Court for the District of Puerto Rico in which the Commonwealth of Puerto Rico had the obligation to issue monetary payments pursuant to Law 9 from May 3, 2017 to the filing date of this motion, including the caption and the amount to be paid;
ii. a list of all civil cases before the U.S. District Court for the District of Puerto Rico in which the Commonwealth of Puerto Rico has
- 9 - issued any monetary payment pursuant to Law 9 from May 3, 2017 to the filing date of this motion, including the caption the amount deposited and the payment date; and
iii. a list of all civil cases before the U.S. District Court for the District of Puerto Rico in which the Commonwealth of Puerto Rico has not issued payment of any judgment entered since May 3, 2017 against an individual granted Law 9 benefits, including the caption, and the amounts owed.
Colón justified this request by arguing that he had an "unqualified
right to collect what is owed to him, and is owed an explanation
why the Commonwealth of Puerto Rico elected to refuse to indemnify
defendant Negrón-Ferández."
Negrón objected, arguing both that the settlement
agreement, not Law 9, was the source of the Commonwealth's
obligation to pay and that under our decision in United States v.
Wells, 766 F.2d 12, 19 (1st Cir 1985), the district court lost the
jurisdiction to issue such an order when the Notice of Appeal was
filed.
The district court granted Colón's motion and ordered
the Puerto Rico Department of Justice to "submit proposed
confidentiality safeguards, including submission of the documents
ex parte, on or before July 13, 2018." Negrón amended his Notice
of Appeal to include the district court's order granting Colón's
motion. The Amended Notice of Appeal gave rise to Appeal No. 18-
1681.
- 10 - C. Appeal No. 18-1755
After filing the Amended Notice of Appeal, Negrón moved
to stay the proceedings pending appeal. The district court issued
an order granting the motion, but later clarified that it applied
only to the payment of the $10,000, not the production of
information by the Puerto Rico Department of Justice relating to
other cases in which the Commonwealth had chosen to defend and
indemnify its public officials. Negrón again amended his Notice
of Appeal to include this clarifying order. This Second Amended
Notice of Appeal gave rise to Appeal No. 18-1755.
II. DISCUSSION
A. Standard of Review
This case implicates an issue that concerns the scope of
the automatic stay provision in Title III of PROMESA, which
expressly incorporates Sections 362 and 922 of the Bankruptcy Code.
We are also asked to consider whether the district court had
jurisdiction to issue an order compelling the production of
information from the Puerto Rico Department of Justice after Negrón
filed his Notice of Appeal. Both issues present pure questions of
law, which we review de novo. Hernández-Miranda v. Empresas Díaz
Másso, Inc., 651 F.3d 167, 170 (1st Cir. 2011). To the extent we
are required to evaluate the district court's findings of fact, we
review those findings for clear error. Ungar v. The Palestine
Liberation Org., 599 F.3d 79, 83 (1st Cir. 2010).
- 11 - We have also been asked as part of Appeal No. 18-1579 to
review the district court's denial of Negrón's motions for
reconsideration. Though we typically review a district court's
denial of reconsideration for abuse of discretion, we will evaluate
the denial of these motions de novo because they
"cover[ ] . . . more or less the same points . . . earlier made to
the district court." Town of Norwood. v. New Eng. Power Co., 202
F.3d 408, 415 (1st Cir. 2000) (emphasis omitted).
B. Appeal No. 18-1579: Application of PROMESA Stay
Because our evaluation of the case turns largely on our
interpretation of PROMESA and the incorporated sections of the
Bankruptcy Code, we will begin with an overview of the statutory
provisions in question.
PROMESA was enacted in 2016 to help the Commonwealth of
Puerto Rico combat its rapidly ballooning government debt crisis.
To do so, PROMESA creates a voluntary, in-court bankruptcy process
for the Commonwealth and its instrumentalities modeled on the
reorganization process for municipalities, codified in Chapter 9
of the Bankruptcy Code. See 48 U.S.C. §§ 2161 (incorporating
various provisions of Chapter 9); Andalusian Glob. Designated
Activity Co. v. F.O.M.B. (In re F.O.M.B.), 954 F.3d 1, 7–8 (1st
Cir. 2020) (stating that the appropriate analogy to a PROMESA Title
III proceeding is a Chapter 9 municipal reorganization). Like a
Chapter 9 petition, a Title III petition triggers an automatic
- 12 - stay on certain actions that seek to enforce claims against the
filing "debtor." See 48 U.S.C. § 2161 (incorporating the automatic
stay provisions of the Bankruptcy Code, 11 U.S.C. §§ 362, 922 into
PROMESA). Therefore, when the Commonwealth filed its Title III
petition in May 2017, it became a "debtor" for purposes of PROMESA,
and all actions enforcing a claim against the Commonwealth were
automatically stayed.
PROMESA's automatic stay derives from two sections of
the Bankruptcy Code, which are expressly incorporated into the
first section of Title III. See 48 U.S.C. § 2161. Section 362 is
the general stay provision and stays "the commencement or
continuation . . . of a judicial . . . proceeding against the
debtor that was or could have been commenced before the
commencement of the [bankruptcy] case . . . or to recover a claim
against the debtor that arose before the commencement of the
[bankruptcy] case." 11 U.S.C. § 362(a)(1). Section 922 applies
"in addition to the stay provided by section 362" in the context
of a municipal bankruptcy and stays "the commencement or
continuation . . . of a judicial, administrative, or other action
or proceeding against an officer or inhabitant of the debtor that
seeks to enforce a claim against the debtor." 11 U.S.C. §
922(a)(1). The difference between the two provisions is the
nominal target of the lawsuit or enforcement action being stayed:
Section 362 applies only to suits "against the debtor," while
- 13 - Section 922 also stays actions against "officer[s] or
inhabitant[s] of the debtor."5 Importantly, however, both sections
apply only to suits in which the ultimate objective of enforcement
is "a claim against the debtor." 11 U.S.C. §§ 362(a)(1),
922(a)(1).
To date, we have had several occasions interpret the
scope of the PROMESA stay with reference to Section 922 of the
bankruptcy code. In doing so, we have held that the stay extends
to actions brought to collect on judgments against the Commonwealth
that were issued before the Title III petition 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). We have also concluded that the
automatic stay prevents creditors of the Commonwealth from filing
suit to secure "post-petition special revenues from the debtor."
Assured Guar. Corp. v. F.O.M.B. (In re F.O.M.B.), 931 F.3d 111,
112 (1st Cir. 2019) (Kayatta, J., in a statement concerning denial
of rehearing en banc) ("[S]ections 922 and 928 of the municipal
bankruptcy code do not afford creditors a shortcut to bypass the
requirement of obtaining traditional stay relief in order to bring
The legislative history of Section 922 evinces Congress's 5
intent to plug a hole left open by Section 362: "the automatic stay provided under Section 362 . . . is incomplete for a municipality because there is the possibility of action by a creditor against an officer or inhabitant of the municipality to collect taxes due to the municipality," money that should properly be considered property of the municipality's bankruptcy estate. H.R. Rep. No. 95-595, 398 (1977).
- 14 - such an enforcement action."). And, we have held that the stay
extends to a plaintiff's suit against both the Commonwealth and
its officers in their official capacities for the diversion of
revenue over which the plaintiff held a lien. 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).
But, we have not had occasion to consider whether the PROMESA stay
applies to a § 1983 action brought against a state officer in his
personal capacity, to which the Commonwealth is not a party, or
whether the fact of settlement changes that equation. Because we
conclude that Colón's effort to enforce the settlement was brought
against the Commonwealth directly, we conclude that the stay
applies.6
1. The District Court's Jurisdiction
Before addressing the automatic stay, we consider the
threshold question of whether the district court had jurisdiction
to mandate payment from Negrón after judgment had been entered and
the case had been dismissed. On appeal, Negrón argues that the
district court lacked jurisdiction to enforce the settlement
agreement and, therefore, that it lacked jurisdiction to enter the
challenged order under Kokkonen v. Guardian Life Insurance Co. of
America, 511 U.S. 375 (1994).
6 In so holding, we do not decide whether Colón's right to the $10,000 balance of the settlement will be adjusted and discharged along with other debts owed by the Commonwealth following the confirmation of a restructuring plan.
- 15 - In Kokkonen, the Court made clear that, while federal
courts had ancillary jurisdiction to enforce their orders,
"[e]nforcement of [a] settlement agreement . . . is more than just
a continuation or renewal of the dismissed suit, and hence requires
its own basis for jurisdiction." Id. at 378; see also Peacock v.
Thomas, 516 U.S. 349, 357 (1996). Though a court may retain
jurisdiction to enforce a settlement agreement by expressly
incorporating that agreement into the judgment, "[t]he judge's
mere awareness and approval of the terms of the settlement
agreement do not suffice to make them part of [the] order."
Kokkonen, 511 U.S. at 381.
Here, the judgment dismissing the case said both that
"[d]efendants shall pay plaintiff the sum of $50,000" and that
payment shall be made "as per the terms of the settlement
agreement." This passing reference to the settlement agreement is
not enough to incorporate its terms into the judgment. F.A.C.,
Inc. v. Cooperativa de Seguros de Vida de Puerto Rico, 449 F.3d
185, 190 (1st Cir. 2006). But the judgment also expressly orders
the "[d]efendants" to pay the settlement amount, and therefore,
the district court has jurisdiction to enforce the obligation of
the defendants, including Negrón, to pay the judgment. Peacock,
516 U.S. at 354 (quoting Kokkonen, 511 U.S. at 380) (explaining
that a federal court can exercise its ancillary jurisdiction to
- 16 - "manage its proceedings, vindicate its authority, and effectuate
its decrees").
We conclude, therefore, that the district court had
jurisdiction to enter the order requiring payment of the balance
of the settlement amount by Negrón. As we next conclude, though,
the order itself cannot stand.
2. The Automatic Stay Applies
The focus of Negrón's appeal is his contention that the
district court erred by ordering immediate payment of the $10,000
settlement balance. Among other things, he argues that "regardless
of what the Complaint may have alleged," at the time the district
court ordered payment, "the only matter" before the court was
Colón's attempt to enforce the settlement agreement. He contends
that what Colón "[wa]s trying to enforce [wa]s an obligation of
the Commonwealth," and that the attempt to do so is therefore
covered by the Title III stay.
At the outset, we note that there is some dispute, at
least before us, about the actual terms of the settlement
agreement. Negrón insists that, in the agreement itself, the
Commonwealth agreed to assume responsibility for the payment of
the $10,000 settlement balance and that he did not. Colón, by
contrast, has argued before us (as the district court found below)
that Negrón was personally a party to the settlement agreement; in
other words, the settlement agreement was a contract enforceable
- 17 - by Colón against Negrón and the Correctional Health Services Corp.,
and that Colón could recover the $10,000 balance from Negrón
directly without implicating any separate agreement the
Commonwealth had made to indemnify Negrón.
Ultimately, the dispute about whether Negrón is
personally liable under the settlement is a question of fact. We
need not resolve it, however, because this factual dispute
regarding the settlement agreement is not actually relevant to the
question of whether the collection effort that is before us is
stayed pursuant to the automatic stay provision in PROMESA.7
The relevant collection effort is Colón's motion to the
district court seeking to enforce the settlement. It is the
resolution of that motion by the district court that gave rise to
the district court's denial of the motion for reconsideration,
which is now before us on appeal.
It seems clear that if the Commonwealth, in fact, was a 7
party to the settlement agreement and assumed the entire responsibility for payment of the $10,000 settlement amount, Colón's collection efforts under the settlement agreement would have to proceed against the Commonwealth. Any effort would then fall squarely in the ambit of 11 U.S.C. § 362(a) because it would constitute a suit to "recover a claim against the debtor [here, the Commonwealth] that arose before the commencement of [the Title III case]." 11 U.S.C. § 362(a). In this circumstance, the fact that Law 9 permits, but does not require, the Commonwealth to indemnify its officers is inapposite. The Commonwealth assumed responsibility for the $10,000, and none of the statutorily- prescribed reasons for repudiating these obligations applies here. See P.R. Laws Ann. tit. 32, §§ 3085, 3087.
- 18 - In attempting to enforce the settlement, Colón styled
his motion as one that seeks recovery from the Commonwealth, not
from Negrón. He moved for the district court to "enter an order
requiring the Commonwealth . . . [to pay] the settlement proceeds,
within a reasonable period not to exceed thirty (30) days."
(emphasis added). Although the order entered by the district court
directed Negrón to pay, and not the Commonwealth, that does not
change the fact that the motion as originally filed by Colón sought
recovery from the Commonwealth only.
Nevertheless, in determining whether the stay applied to
Colón's pursuit of payment, the district court trained its analysis
on whether Colón's § 1983 complaint against Negrón in his
individual capacity was an action seeking to enforce a claim
against the debtor. But that focus was mistaken because the § 1983
claim was no longer before the district court at the time it did
so -- indeed, it had been dismissed with prejudice when the parties
settled. Instead, the district court was evaluating Colón's motion
for "an order requiring the Commonwealth . . . [to pay] the
settlement proceeds." (emphasis added). That is neither an
attempt to enforce a claim against Negrón nor an "action or
proceeding against an officer or inhabitant of the debtor that
seeks to enforce a claim against the debtor." 11 U.S.C.
§ 922(a)(1). Instead, in that motion, Colón seeks "to recover a
claim against the debtor" directly. 11 U.S.C. § 362(a)(1). Thus,
- 19 - the automatic stay incorporated in 48 U.S.C. § 2161 should have
applied.8
Put otherwise, the operative "action or proceeding" for
the purposes of determining whether Colón seeks to bring to bear
"a claim against the debtor," see 11 U.S.C. §§ 362, 922, is Colón's
claim for enforcement and not the original § 1983 complaint. As
our discussion above of Kokonnen reflects, his action to enforce
the settlement is distinct from the § 1983 claim -- it "is more
than just a continuation or renewal of the dismissed suit" and
"requires its own basis for jurisdiction." Kokkonen, 511 U.S. at
378. Thus, Colón, by motion, was endeavoring to enforce payment
by the Commonwealth and therefore "to recover a claim against the
debtor" when he sought the $10,000 payment. 11 U.S.C. § 362.
Our focus on the motion to enforce the settlement rather
than the § 1983 claim accords with the purpose of the automatic
stay provisions in Sections 362 and 922, which we have made clear
The district court also was concerned that Colón could not 8
have collected from the Commonwealth anyway, as the Commonwealth is protected by Eleventh Amendment immunity. See Ortiz- Feliciano v. Toldeo-Davila, 175 F.3d 37, 40 (1st Cir. 1999) ("[E]ven if the [Commonwealth] agreed to indemnify [defendants], the Eleventh Amendment would still bar a claim by the plaintiffs against the Commonwealth in federal court."). We do not find this argument persuasive. Whether the settlement can be enforced against the Commonwealth in federal court is a separate question from whether an effort to do so is an action against the Commonwealth. The fact that it may not be advantageous for Colón to pursue the Commonwealth once the stay is lifted does not compel us to conclude that his motion is not an action against it.
- 20 - are intended to give the debtor -- here, the Commonwealth --
"breathing room by 'stop[ping] all collection efforts.'" In re
Soares, 107 F.3d 969, 975 (1st Cir. 1997) (quoting H.R. Rep. No.
95-595, at 340 (1977)); see also Municipality of San Juan v. Puerto
Rico, 919 F.3d 565, 577 (1st Cir. 2019) (same).
This focus on Colón's motion rather than the § 1983 suit
or the litigation as a whole is also consistent with
interpretations of the automatic stay in other contexts. See,
e.g., Lehman v. Revolution Portfolio L.L.C., 166 F.3d 389, 392 n.5
(1st Cir. 1999) ("While Lehman's bankruptcy required a stay vis-
à-vis the claims involving him, it did not require the court to
stay other aspects of the litigation." (internal citations
omitted)); Austin v. Unarco Indus., Inc., 705 F.2d 1, 4-5 (1st
Cir. 1983) (concluding § 362(a) stay did not apply to plaintiff's
appeal of claims against solvent codefendants after one
codefendant petitioned for bankruptcy); Koolik v. Markowitz, 40
F.3d 567, 568 (2d Cir. 1994) ("[A]n answer that asserts a
counterclaim against a plaintiff who becomes a bankruptcy debtor
is an 'action or proceeding against the debtor' within the meaning
of § 362(a)(1) . . . ."); Dominic's Rest. of Dayton v. Mantia, 683
F.3d 757, 760-61 (6th Cir. 2012) (analyzing whether the automatic
stay under § 362(a) applied to contempt proceedings without
assessing whether the stay would apply to the underlying litigation
that gave rise to the order to show cause why the debtor should
- 21 - not be held in contempt); cf. David v. Hooker, 560 F.2d 412, 418
(9th Cir. 1977) (evaluating whether the stay applied to discovery
orders separately from its application to the principal
proceedings).
We note here that this conclusion does not necessarily
mean that Colón cannot recover the $10,000 balance of the
settlement amount. Nothing in our decision prevents him from
seeking relief from the automatic stay from the Title III court.
Nor, as we noted in footnote 6 above, does our decision here
necessarily mean that, if the Commonwealth truly is liable for the
$10,000 payment, that debt will be discharged following
confirmation of the Title III plan. See Deocampo v. Potts, 836
F.3d 1134, 1136 (9th Cir. 2016).
Moreover, we emphasize that, by ruling as we do, we do
not mean to suggest our implicit agreement with Negrón's
alternative contention that the automatic stay provided for in
§ 922(a)(1) would have applied to the original § 1983 suit that
gave rise to the settlement at issue. The statute provides that
a judicial action will be stayed if it is "against an officer or
inhabitant of the debtor" and "seeks to enforce a claim against
the debtor." 11 U.S.C. § 922. It is hardly evident from that
text that an action against an officer in his individual capacity
-- in which the Commonwealth need not get involved and indeed might
choose not to get involved -- qualifies. See Deocampo, 836 F.3d
- 22 - at 1138 (noting the "oddity" that a municipal bankruptcy could
stay an action in which the city was not a party). Moreover, the
legislative history of § 922, which notes that the provision
accounts for "the possibility of action by a creditor against an
officer or inhabitant of the municipality to collect taxes due the
municipality," H.R. Rep. No. 95-595, at 398 (1977), does not itself
suggest that the stay would apply to an individual capacity officer
suit, given its focus on a very different type of action: one
that targets the municipality's treasury directly.9
To be sure, Negrón argues that the Puerto Rico Department
of Justice is "generally empower[ed]" to pay for judgments against
its officers and former officers and that it does so in the "vast
majority" of cases. But, he does not claim that the Commonwealth's
obligation to pay on his behalf is absolute.10 Thus, even if we
9 It is also possible that this portion of the House Report speaks to § 922(a)(2), which stays "the enforcement of a lien on or arising out of taxes or assessments owed to the debtor," rather than to § 922(a)(1). Regardless, the point holds that the legislative history is at least consistent with our skepticism that the stay would have applied to Colón's suit from the outset. 10 In contrast to Puerto Rico's permissive indemnification policy, the courts that have considered the issue in otherwise similar cases to ours have held that other municipalities' guaranteed indemnification policies were dispositive. See Deocampo, 836 F.3d at 1144 n.13 (acknowledging that in the "automatic stay" context, courts have "ruled that an indemnity obligation triggers . . . 11 U.S.C. §§ 362(a) & 922"); Williams v. Kenney, No. CIV S-07-0100, 2008 WL 3540408, at *8 (E.D. Cal. Aug. 12, 2008) (holding that, even when a city is "no longer a party," an action is "against the debtor" when the city is "required to indemnify the employee for the amount of the judgment
- 23 - were to assume that an obligation of that latter sort on the part
of the Commonwealth could bring an action against an individual
officer in his individual capacity within the scope of § 922, we
do not confront here a case involving any such mandatory obligation
to indemnify on the part of the Commonwealth. Cf. A.H. Robins
Co. v. Piccinin, 788 F.2d 994, 999 (4th Cir. 1986) (explaining
that a § 362 stay may only stay proceedings against a non-bankrupt
codefendant in the "unusual situation" where "there is such
identity between the debtor and the third-party defendant that the
debtor may be said to be the real party defendant and that a
judgment against the third-party defendant will in effect be a
judgment or finding against the debtor," such as where the non-
bankrupt codefendant "is entitled to absolute indemnity by the
debtor on account of any judgment that might result against them
in that case" (emphases added)); In re Slabicki, 466 B.R. 572, 580
(B.A.P. 1st Cir. 2012) (similar); In re Lockard, 884 F.2d 1171,
1179 (9th Cir. 1989) (concluding the "unusual situation" rule from
A.H. Robins Co. did not call for staying action against a bond
executed by a non-debtor surety because "a surety has obligations
or settlement"); In re City of Stockton, 484 B.R. 372, 376 (Bankr. E.D. Cal. 2012) (holding that, because the city had "undertaken [the individual officials'] defense" and would "be required to pay the judgment," "the civil action against the individuals 's[ought] to enforce a claim against the debtor' within the meaning of § 922(a)" (quoting 11 U.S.C. § 922(a)(1))).
- 24 - that are 'independent' and primary, not derivative of those of the
debtor" (quoting In re McLean Trucking Co., 74 B.R. 820, 829
(Bankr. W.D.N.C. 1987))).
We thus hold merely that, because of the way in which
Colón sought to collect the money he is owed in this case, the
automatic stay applies to his effort to do so. And it is on that
basis that we conclude that we must vacate the district court's
enforcement order.11
C. Appeal No. 18-1681: Jurisdiction After Notice of Appeal
On June 18, 2018, two weeks after the initial Notice of
Appeal was entered for Appeal No. 18-1579, Colón moved to compel
the production of information from the Puerto Rico Department of
Justice regarding other cases in which the Commonwealth had
indemnified a public officer under Law 9 after the filing of its
Title III petition. Negrón challenges the district court's order
granting this motion, arguing that the district court lacked
jurisdiction to issue such an order and that the information Colón
requested is irrelevant. We agree with Negrón that the Notice of
11 Because we conclude that we must vacate the order below, we do not reach whether the district court erred by modifying its judgment to mention another case, unrelated to this one, in which the Commonwealth paid for a settlement pursuant to Law 9 after the Title III petition was filed. We also need not reach Negrón's argument that, by ordering him to pay the settlement balance personally, the district court violated his right to due process.
- 25 - Appeal in Appeal No. 18-1579 divested the district court of
jurisdiction to issue the order.
As a general rule, "[t]he filing of a notice of appeal
is an event of jurisdictional significance -- it confers
jurisdiction on the court of appeals and divests the district court
of its control over those aspects of the case involved in the
appeal." Griggs v. Provident Consumer Disc., 459 U.S. 56, 58
(1982) (per curiam); see also United States v. Distasio, 820 F.2d
20, 23 (1st Cir. 1987). We have recognized a few narrow exceptions
to this rule in circumstances where the appeal is clearly frivolous
or where the appellant seeks interlocutory review of a non-
appealable order. Rivera-Torres v. Ortiz Velez, 341 F.3d 86, 97–
98 (1st Cir. 2003) (citing, inter alia, United States v. DeFries,
129 F.3d 1293, 1302–03 (D.C. Cir. 1997)). We have also held that
the rule permits a district court to enter orders "that concern
matters unrelated to the 'substance of the decision' being
appealed." United States v. Maldonado-Rios, 790 F.3d 62, 64 (1st
Cir. 2015) (quoting 16A Wright & Miller, Federal Practice &
Procedure § 3949.1 (4th ed. 2008)).
None of these exceptions apply here. Appeal No. 18-1579
is not frivolous, nor does it seek review of an unappealable order.
See Municipality of San Juan, 919 F.3d at 574 (holding that a
district court's refusal to acknowledge the PROMESA stay is
immediately appealable even if it does not end the litigation on
- 26 - the merits); see also Tringali v. Hathaway Mach., 796 F.2d 553,
557 (1st Cir. 1986) (holding that a district court order lifting
the automatic stay is an appealable final order). And, the order
seeking discovery is not so unrelated to the substance of the
decision being appealed that it is permissible under Griggs. 459
U.S. at 58. As Colón himself puts it, the purpose of gathering
this information is to "shed light on the reasons why the
Commonwealth opted to honor its obligation to indemnify government
defendants pursuant to Law 9 in other cases, when it decided not
to do in this case." However, this information is only relevant to
the extent that it sheds light on the question of whether the
Commonwealth could voluntarily pay the $10,000 judgment without
violating the PROMESA stay.
Colón urges us to conclude that the discovery order could
be justified as an exercise of the district court's ancillary
jurisdiction over the judgment and settlement. But, Colón's
argument, in effect, would allow for the district court to exercise
concurrent jurisdiction with the court of appeals over a matter
after the notice of appeal has been filed. This is precisely the
arrangement that the Court in Griggs rejected; "a federal district
court and a federal court of appeals should not attempt to assert
jurisdiction over a case simultaneously," Griggs, 459 U.S. at 58.
The district court, therefore, lacked jurisdiction to issue the
order, and we vacate the district court's order on this basis. As
- 27 - a consequence, we need not decide whether a discovery order falls
within the scope of the PROMESA stay.
D. Appeal No. 18-1755: Stay Pending Appeal in Appeal No. 18-1681
Finally, Negrón appeals the district court's decision to
exclude the order compelling production of information from the
Puerto Rico Department of Justice (Appeal No. 18-1681) from the
scope of the stay pending appeal. However, after Negrón filed
this appeal, the district court agreed to stay the order requiring
production of this information. Moreover, we have already
concluded that the district court lacked jurisdiction to enter
that order.
This appeal is therefore moot and will be dismissed.
III. CONCLUSION
For the foregoing reasons, we vacate the district
court's order requiring immediate payment of the settlement
balance (Appeal No. 18-1579) and remand with instructions to stay
Colón's enforcement action pending resolution of the Title III
case. We also vacate the district court's order requiring the
Puerto Rico Department of Justice to produce information
concerning other cases in which the Commonwealth has indemnified
its officers after filing the Title III petition (Appeal. No. 18-
1681) and dismiss the appeal of the stay order (Appeal No. 18-
1755) as moot.
The parties shall bear their own costs of appeal.
- 28 -