DORAL QUESTIONS THE APPLICABILITY OF LAW 66

On Wednesday, December 31, both Doral and the government filed their respective appeals. Some may ask why is Doral Appealing? The bank seeks additional factual determinations of fact and the imposition of attorney’s fees on the Government for a baseless defense. But the real reason is another. Again, Doral’s legal representation has made an intelligent move by saying:

The additional facts are essential for the imposition of attorney’s fees and to prevent future litigation that the State faced with its defeat in court has already raised. For example, the State already hollers its attempt to apply Article 28 of Law 66-2014 in order not to comply with the installment payments established in the 2012 Agreement. [See pg. 175 of this Report ]. This although it is not an obligation imposed by a Judgment but by a contract that was illegally left without effect. (Translation ours. Emphasis in the original, page 9 of Doral’s Appeal )

Law 66, is known as the “Special Operations Fiscal Sustainability Act and Government of Puerto Rico”  allows the Government when the obligations is a judgment that is to be satisfied, and exceeds $28 million, to pay instead a maximum of $3 million per year. That way, the Government, as Doral points out, would take 76 years (in reality it is 76.6) in paying it

As Doral says, the law is probably unconstitutional under both constitutions ( my analysis on the constitutionality of the law) Doral argues that since the Government never argued the applicability of Law 66 to the litigation, it waived this allegation since affirmative defenses that are not raised in the answer to the complaint are waived (except for jurisdictional ones, of which this is not one). In the alternative, Doral argues that since the judgment is of a declaratory nature, it does not alter the contractual nature of the 2012 final agreement, which was when the obligation was created and hence, Law 66 is inapplicable. What Doral actually is doing is inviting the Appellate Court to prevent having to deal with a constitutional discussion in the future about Law 66 in the future. Doral quotes Brau v. Estado Libre Asociado de Puerto Rico, 190 D.P.R. 315, 337 (2014) “courts must make an effort to come to congruent and compatible that advance the constitutionality of . . . the laws” in support of its invitation to avoid the future constitutional controversy. Excellent presentation and it may very well succeed.

All this is important for the Government’s game is delay, delay delay, in the hope of the FDIC liquidating Doral, more than in winning the case. Since the FDIC and the American taxpayer would collect the proceeds of the contract (more about this later), and the Government knows this; there must be some interest of its “dearest friends” in the liquidation of Doral. We will see what happens.

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