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In re Fin. Oversight & Mgmt. Bd.

In re Fin. Oversight & Mgmt. Bd.

United States District Court for the District of Puerto Rico

June 29, 2021, Decided; June 29, 2021, Filed

No. 17 BK 3283-LTS

Opinion

 [*562]  Memorandum Opinion Regarding Motion of the Commonwealth of Puerto Rico Pursuant to Bankruptcy Code Section 365 For  [*563]  Entry of an Order Approving Assumption of Settlement Agreements with García Rubiera Class Plaintiffs

Pending before the Court is the Motion of the Commonwealth of Puerto Rico Pursuant [**7]  to Bankruptcy Code Section 365 for Entry of an Order Approving Assumption of Settlement Agreements with García Rubiera Class Plaintiffs (Docket Entry No. 15171 in Case No. 17-3283, the "Motion").2 The Motion, filed by the Financial Oversight and Management Board for Puerto Rico (the "Oversight Board") acting as the representative of the Commonwealth of Puerto Rico (the "Commonwealth") under section 315(b) of the Puerto Rico Oversight, Management, and Economic Stability Act ("PROMESA"), requests entry of an order assuming two settlement agreements pursuant to section 365(a) of the Bankruptcy Code, 11 U.S.C. § 365(a).3

The Court has subject matter jurisdiction of this contested matter pursuant to 48 U.S.C. § 2166(a). The Court heard oral argument on the Motion on December 9, 2020. Having considered carefully all of the submissions4 and arguments made in connection with the Motion, the Court will enter an order granting the Motion for the reasons that follow.

Background

Pursuant to Puerto Rico's Compulsory Motor Vehicle Liability Act, motorists in Puerto Rico are required to pay automotive insurance premiums to the Secretary of the Treasury when they register their vehicles or renew their vehicles' registration. The Commonwealth transfers such premiums to the Compulsory Liability Joint Underwriting Association of Puerto Rico (the "JUA"). Motorists who acquire private automobile [**9]  insurance can opt out of the government's insurance scheme and, if they have already paid their premium to the Commonwealth, request reimbursement of the so-called "duplicate premium."

The present dispute concerns the settlement of two lawsuits regarding motorists' overpayment of duplicate premiums. See generally Gracia-Gracia v. Financial Oversight and Management Board f or P.R. (In re Fin. Oversight & Mgmt. Bd. f or P.R.), 939 F.3d 340, 344-346 (1st Cir. 2019) (detailing the substantive and procedural history of the litigation). Following well over a decade of litigation concerning whether and to what extent the Commonwealth possesses duplicate premiums rightfully belonging to vehicle owners and the steps  [*564]  that the Commonwealth should be required to take to make a valid disposition of such funds, the Commonwealth in 2016 entered into settlement agreements in two related cases concerning duplicate premiums: the case captioned Gladys García Rubiera, et al., v. Asociación de Suscripción Conjunta, et al., No. KDP2001-1441 in the Commonwealth Court of First Instance (the "Commonwealth Settlement Agreement"), and the case captioned Gladys García Rubiera, et al. v. Hon. Luis G. Fortuño, et al., Case No. 02-1179 (GAG) in the United States District Court for the District of Puerto Rico (the "Federal Settlement Agreement" and, together with [**10]  the Commonwealth Settlement Agreement, the "Settlement Agreements").5

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631 B.R. 559 *; 2021 U.S. Dist. LEXIS 121171 **; 70 Bankr. Ct. Dec. 109; __ F. Supp. 3d __; 2021 WL 2676983

In re: THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, as representative of THE COMMONWEALTH OF PUERTO RICO et al., Debtors.1

Prior History: In re Fin. Oversight & Mgmt. Bd., 2019 U.S. Dist. LEXIS 71212 (D.P.R., Apr. 4, 2019)Garcia-Rubiera v. Flores-Galarza, 516 F. Supp. 2d 180, 2007 U.S. Dist. LEXIS 69442 (D.P.R., Aug. 30, 2007)

CORE TERMS

settlement agreement, notices, premiums, duplicate, executory, parties, executory contract, courts, business judgment, reimbursement, claimants, obligations, outstanding, purposes, underlying litigation, Plaintiffs', motorists, funds, class member, contracts, cooperate, contends, website