899 F.3d 1
1st Cir.2018Background
- Peaje Investments is the beneficial owner of $65 million in HTA bonds issued under a 1968 Resolution; it claims a lien on toll revenues from three highways and seeks post-petition tolls diverted by the Authority/Commonwealth.
- The Authority’s 1968 Resolution created a Sinking Fund and directed that revenues held by the Fiscal Agent "shall be subject to a lien and charge in favor of the holders of the bonds."
- Puerto Rico’s financial crisis prompted executive actions that suspended deposits of toll revenues to the Fiscal Agent; Peaje sued and then pursued relief in the Title III PROMESA bankruptcy cases.
- Peaje asserted that its lien is a statutory lien (not a security interest) and thus exempt from Code sections 552 and 928; it alternatively sought relief as holder of a security interest (argued later).
- The Title III court struck Peaje’s late-pressed alternative (non-statutory/security-interest) theory as waived, denied a TRO/preliminary injunction and adequate-protection relief; Peaje appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Peaje preserved (or waived) its alternative contention that its lien is a security interest (non-statutory) | Peaje argued generally that it "has a lien" and later advanced a security-interest theory in reply/arguendo; it contends striking was improper | Defendants moved to strike Peaje’s late security-interest argument as untimely under local rules | Court: No abuse of discretion in striking; Peaje limited to statutory-lien argument for the motion (waiver not permanently fatal) |
| Whether Peaje holds a statutory lien on HTA toll revenues created "solely by force of a statute" | Peaje: Enabling Act + 1968 Resolution (and regulatory/agency elaboration) create an automatic statutory lien on specified circumstances | Defendants: The Enabling Act permits but does not compel pledges; the Resolution is not a statute and cannot convert a voluntary pledge into a statutory lien | Held: Peaje does not hold a statutory lien; neither the Act nor the Resolution creates a lien that arises solely by force of statute |
| Whether Peaje was entitled to relief from the automatic stay / preliminary injunction | Peaje: Its asserted lien (statutory) means post-petition tolls are "special revenues" protected from Code §552/subject to §928 exception; thus it has an interest needing protection | Defendants: No statutory lien; at most a security interest (if argued), so post-petition revenues may be affected by Code provisions; no protected post-petition interest shown | Held: Because no statutory lien exists, Peaje lacks the requisite property interest to obtain stay relief or a preliminary injunction; primary grounds for denial affirmed |
| Validity/effect of Title III court’s alternative findings (irreparable harm / adequate protection) | Peaje: District court erred in burden analysis and findings on adequate protection/irreparable harm | Defendants: Court’s findings were sufficient to deny relief | Held: Alternative findings vacated and remanded for reconsideration (so they have no preclusive effect) — Title III court should reevaluate on an updated record if Peaje renews relief consistent with this opinion |
Key Cases Cited
- Peaje Invs. LLC v. García‑Padilla, 845 F.3d 505 (1st Cir. 2017) (prior appeal addressing related stay issues)
- Waldron v. George Weston Bakeries Inc., 570 F.3d 5 (1st Cir. 2009) (standards for abuse-of-discretion review)
- Bruns v. Mayhew, 750 F.3d 61 (1st Cir. 2014) (likelihood-of-success requirement for preliminary injunction)
- Lionel Corp. (In re Lionel Corp.), 29 F.3d 88 (2d Cir. 1994) (statutory liens arise by statutory operation absent consent or judicial action)
- Amoah v. McKinney, 875 F.3d 60 (1st Cir. 2017) (review of district-court procedural rulings for abuse of discretion)
- Turner v. Hubbard Sys., Inc., 855 F.3d 10 (1st Cir. 2017) (same)
- Int'l Union, United Mine Workers v. Mine Safety & Health Admin., 407 F.3d 1250 (D.C. Cir. 2005) (process and notice considerations for rulemaking cited by analogy)