Narrative Opinion Summary
This case involves two civil actions concerning a voluntary deferred compensation plan for University of Puerto Rico (UPR) employees, with Voya Institutional Trust Company acting as trustee. Voya filed a lawsuit against UPR in federal court, while UPR initiated proceedings against Voya in Puerto Rico's Court of First Instance, which Voya removed to federal court. The core legal issue revolves around whether transferring plan assets to UPR's board would breach the plan agreement or violate laws, including PROMESA. Voya seeks declaratory judgment to prevent the asset transfer, while UPR demands immediate injunctive relief to compel it. The court addressed subject matter jurisdiction, determining that jurisdiction under PROMESA section 405 is moot due to the expiration of the automatic stay, while section 407(a) does not apply to Voya as a trustee. However, jurisdiction is valid under section 306(a)(2), as the proceedings relate to Puerto Rico’s Title III bankruptcy case. Subsequently, the court transferred the actions to the Title III bankruptcy proceedings. This transfer was guided by the potential impact on the debtor's estate, aligning with PROMESA's framework to manage Puerto Rico's fiscal crisis. The court's decision highlights the complex interplay between federal jurisdiction, bankruptcy proceedings, and fiscal oversight under PROMESA.
Legal Issues Addressed
Automatic Stay and Jurisdictional Implicationssubscribe to see similar legal issues
Application: The expiration of the automatic stay under PROMESA section 405 renders claims under this section moot, affecting Voya's claims related to asset transfer.
Reasoning: Voya acknowledged that jurisdiction under PROMESA section 405 is moot due to the stay's expiration but contended that jurisdiction exists under PROMESA sections 407(a) and 306(a)(2).
Definition and Implications of 'Top Hat Plan'subscribe to see similar legal issues
Application: The case involves a top hat plan, which is not covered by ERISA, implying that the trust assets remain UPR's property and subject to creditors' claims in insolvency.
Reasoning: A 'top hat plan' is defined as an unfunded plan for deferred compensation for select employees, with a rabbi trust allowing an employer to set aside funds for such plans.
Exclusion of Trustees under PROMESA Section 407subscribe to see similar legal issues
Application: Voya, as a trustee rather than a creditor, cannot claim jurisdiction under PROMESA section 407(a), which specifies enforcement rights for creditors only.
Reasoning: Subject matter jurisdiction cannot be established under PROMESA section 407(a) because... section 407(b) specifically allows only creditors to enforce rights through actions in the United States District Court for the District of Puerto Rico.
Subject Matter Jurisdiction under PROMESAsubscribe to see similar legal issues
Application: The court determined that subject matter jurisdiction exists under PROMESA section 306(a)(2) due to the case's relation to the Commonwealth of Puerto Rico’s Title III petition.
Reasoning: Subject matter jurisdiction is established under PROMESA section 306(a)(2) as the action is 'related to' the Commonwealth of Puerto Rico’s Title III petition.
Transfer to Bankruptcy Case under PROMESAsubscribe to see similar legal issues
Application: The Court transferred the case to the Title III bankruptcy proceedings due to its potential impact on the debtor's estate, consistent with PROMESA Section 306(d)(3).
Reasoning: Consequently, the Court transfers the cases Voya Institutional Trust Co. v. University of Puerto Rico and University of P.R. v. Voya Institutional Trust Co. to Bankruptcy Case No. 17-bk-03283 (LTS) under PROMESA Section 306(d)(3).