ColóN-Torres v. NegróN-Fernández, No. 18-1579

• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)
• Writing for the Court: HOWARD, Chief Judge.
• Parties: 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.
• Decision Date: 10 May 2021
• Docket Number: No. 18-1579,No. 18-1755,No. 18-1681

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.

No. 18-1579
No. 18-1681
No. 18-1755

United States Court of Appeals For the First Circuit

May 10, 2021

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.^*

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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.

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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.

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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

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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

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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

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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

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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

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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

...