Opinion
No. 17 BK 3283-LTS (Jointly Administered) No. 17 BK 4780-LTS (Jointly Administered) Adv. Proc. No. 20-142-LTS
2021-09-27
IN RE: The FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, as representative of The Commonwealth of Puerto Rico et al., Debtors. In re: The Financial Oversight and Management Board for Puerto Rico, as representative of Puerto Rico Electric Power Authority, Debtor. PV Properties, Inc., Plaintiff, v. Puerto Rico Electric Power Authority, The Financial Oversight and Management Board for Puerto Rico, and Natalie Jaresko, Defendants.
PROSKAUER ROSE LLP, By: Martin J. Bienenstock, Ehud Barak, Margaret A. Dale, John A. Peterson III, Eleven Times Square, New York, NY 10036 and Paul V. Possinger, 70 W. Madison St., Suite 3800, Chicago, IL 60602 and Jennifer L. Jones, 2029 Century Park East, Suite 2400, Los Angeles, CA 90067, O'NEILL & BORGES LLC, By: Hermann D. Bauer, 250 Muñoz Rivera Ave., Suite 800, San Juan, PR 00918-1813, Attorneys for the Financial Oversight and Management Board, in its capacity as defendant and as representative for the Puerto Rico Electric Power Authority, and Natalie Jaresko. FERNANDO E. AGRAIT, By: Fernando E. Agrait, 701 Avenida Ponce de León, Edificio Centro de Seguros, Oficina 414, San Juan, Puerto Rico 00907, CHARLES A. CUPRILL, P.S.C., LAW OFFICES, By: Charles A. Cuprill-Hernandez, 356 Fortaleza Street - Second Floor, San Juan, PR 00901, Attorneys for Plaintiff PV Properties, Inc.
PROSKAUER ROSE LLP, By: Martin J. Bienenstock, Ehud Barak, Margaret A. Dale, John A. Peterson III, Eleven Times Square, New York, NY 10036 and Paul V. Possinger, 70 W. Madison St., Suite 3800, Chicago, IL 60602 and Jennifer L. Jones, 2029 Century Park East, Suite 2400, Los Angeles, CA 90067, O'NEILL & BORGES LLC, By: Hermann D. Bauer, 250 Muñoz Rivera Ave., Suite 800, San Juan, PR 00918-1813, Attorneys for the Financial Oversight and Management Board, in its capacity as defendant and as representative for the Puerto Rico Electric Power Authority, and Natalie Jaresko.
FERNANDO E. AGRAIT, By: Fernando E. Agrait, 701 Avenida Ponce de León, Edificio Centro de Seguros, Oficina 414, San Juan, Puerto Rico 00907, CHARLES A. CUPRILL, P.S.C., LAW OFFICES, By: Charles A. Cuprill-Hernandez, 356 Fortaleza Street - Second Floor, San Juan, PR 00901, Attorneys for Plaintiff PV Properties, Inc.
PROMESA Title III
OPINION AND ORDER GRANTING MOTION TO DISMISS PLAINTIFF'S AMENDED COMPLAINT PURSUANT TO FED. R. CIV. P. 12( B )(1) AND 12( B )(6)
LAURA TAYLOR SWAIN, United States District Judge
Before the Court is Defendants’ Motion to Dismiss Plaintiff's Amended Complaint Pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6) (Docket Entry No. 12 in Adv. Proc. No. 20-00142-LTS, the "Motion") filed by the Financial Oversight and Management Board for Puerto Rico (the "Oversight Board"), in its own capacity and as the Title III representative of the Puerto Rico Electric Power Authority ("PREPA"), and Natalie Jaresko (together with the Oversight Board and PREPA, "Defendants"). The Motion seeks dismissal of the Amended Adversary Complaint (Docket Entry No. 3, the "Amended Complaint") filed by PV Properties, Inc. ("PV Properties" or "Plaintiff").
All docket entry references are to entries in Adversary Proceeding No. 20-00142-LTS (the "Adversary Proceeding"), unless otherwise specified.
Plaintiff filed a response to the Motion (Docket Entry No. 17, the "Opposition"), and Defendants filed a reply in support of the Motion (Docket Entry No. 18, the "Reply"). The Court has considered carefully all of the arguments and submissions made in connection with the Motion. The Court has statutory subject matter jurisdiction of this action pursuant to section 306(a) of the Puerto Rico Oversight, Management, and Economic Stability Act ("PROMESA"), 48 U.S.C. § 2166(a).
In the Amended Complaint, PV Properties asserts that it produces and owns renewable energy certificates ("RECs") arising out of the production of solar power. PV Properties contends that, under Commonwealth law, PREPA has a statutorily imposed obligation to purchase RECs and comply with the Commonwealth's renewable portfolio standard. Accordingly, PV Properties requests entry of a declaratory judgment recognizing that PREPA is obligated to purchase PV Properties’ RECs and determining that such obligation is an administrative expense pursuant to section 507(a)(2) of the Bankruptcy Code, 11 U.S.C. § 507(a)(2).
For the following reasons, Defendants’ Motion is granted as set forth herein, and Plaintiff's Amended Complaint is dismissed in part pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of constitutional subject matter jurisdiction and in part pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted.
Rule 12(b) is made applicable to this Adversary Proceeding by section 310 of PROMESA, 48 U.S.C. § 2170, and Rule 7012(b) of the Federal Rules of Bankruptcy Procedure.
I.
BACKGROUND
The following recitation of facts is drawn from the Amended Complaint, except where otherwise noted.
Act 82-2010, as amended by Act 17-2019, mandates that PREPA comply with a renewable portfolio standard requiring that a certain percentage of the electricity distributed by PREPA be generated from renewable energy sources (the "Renewable Portfolio Standard"). See 12 L.P.R.A. §§ 8124 (setting forth the "mandatory amount of sustainable renewable energy or alternative renewable energy applicable to a retail electricity supplier"), 8121 (defining "retail electricity supplier" to include PREPA). To the extent that PREPA does not produce renewable energy or purchase renewable energy from others in an amount sufficient to comply with the Renewable Portfolio Standard, PREPA can meet its obligations through the purchase of RECs. See 12 L.P.R.A. §§ 8131, 8132. Each REC represents one megawatt-hour of energy generated from a renewable energy source. 12 L.P.R.A. § 8121(8). Under Commonwealth law, "RECs are personal property and tradable or negotiable commodities that may be purchased, sold, assigned, and/[o]r transferred between persons for any lawful purpose." 12 L.P.R.A. § 8129; see also 12 L.P.R.A. § 8121(8).
PV Properties is a Puerto Rico corporation that generates renewable energy through distributed photovoltaic generation systems. (Am. Compl. ¶¶ 2, 3, 16.) As a result, PV Properties generates 24,000 RECs per year. (Am. Compl. ¶ 16.) Those RECs are, according to PV Properties, worth more than $840,000. (Am. Compl. ¶ 16.) PV Properties asserts that PREPA has failed to comply with its Renewable Portfolio Standard obligations—and failed to purchase PV Properties’ RECs—since the commencement of PREPA's case under Title III of the Puerto Rico Oversight, Management, and Economic Stability Act ("PROMESA") on July 2, 2017. (Am. Compl. ¶¶ 2, 32.) As a result of PREPA's alleged noncompliance and its unwillingness to purchase PV Properties’ RECs, PV Properties contends, PV Properties has suffered an injury to the "economic and financial value that each REC represents as an asset." (Am. Compl. ¶ 2.) PV Properties further alleges that the Oversight Board and its Executive Director, Natalie Jaresko, are "empowered to authorize the acquisition of Plaintiff's RECs by PREPA." (Am. Compl. ¶¶ 5, 6.)
The dispute between PV Properties and PREPA concerning PREPA's unwillingness to purchase PV Properties’ RECs predates PREPA's Title III case, even though the Amended Complaint concerns only RECs generated after the commencement of PREPA's Title III case. (See Am. Compl. ¶ 11.) On March 3, 2017, PV Properties commenced an administrative proceeding with the Puerto Rico Energy Commission (the "Administrative Proceeding"), the predecessor to the Puerto Rico Energy Bureau ("PREB"), seeking to compel PREPA to purchase PV Properties’ RECs. (Am. Compl. ¶ 21.) On October 4, 2017, and May 31, 2019, PV Properties sought relief from the automatic stay (or recognition of the inapplicability of the automatic stay) from this Court so that it could continue prosecuting the Administrative Proceeding. (See Docket Entry No. 332 in Case No. 17-4780; Docket Entry No. 7179 in Case No. 17-3283.) The Court denied both motions. (See Docket Entry No. 387 in Case No. 17-4780; Docket Entry No. 7746 in Case No. 17-3283.)
Based upon the foregoing allegations, the Amended Complaint requests a judgment declaring that "pursuant to Act 17-2019 PREPA is obligated to acquire PV Properties[’] REC's and to pay for those REC's generated by PV Properties after the filing of PREPA[’s] Title III petition, as an administrative expense under 11 U.S.C. § 507(a)(2)." (Am. Compl. at 9.)
II.
DISCUSSION
Defendants move pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) to dismiss the Amended Complaint for lack of subject matter jurisdiction and for failure to state a claim upon which relief can be granted. A court presented with motions to dismiss under both Rules 12(b)(1) and 12(b)(6) should ordinarily decide jurisdictional questions before addressing the merits. Deniz v. Municipality of Guaynabo, 285 F.3d 142, 149 (1st Cir. 2002). The party invoking the jurisdiction of a federal court carries the burden of proving that there is a proper basis for the exercise of jurisdiction. Johansen v. United States, 506 F.3d 65, 68 (1st Cir. 2007). The Court also has an independent duty to assess whether it has subject matter jurisdiction of an action. See Fed. R. Civ. P. 12(h)(3) ; FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 231, 110 S.Ct. 596, 107 L.Ed.2d 603 (1990).
1. Subject Matter Jurisdiction
Article III, Section 2 of the Constitution of the United States limits the exercise of federal judicial power to actual cases and controversies. U.S. Const. art. III, § 2; Aetna Life Ins. Co. of Hartford, Conn. v. Haworth, 300 U.S. 227, 239-41, 57 S.Ct. 461, 81 L.Ed. 617 (1937). The authority conferred on federal courts by the Declaratory Judgment Act, 28 U.S.C. § 2201, is likewise limited to controversies that are within the constitutionally constrained scope of federal jurisdiction. Aetna, 300 U.S. at 240, 57 S.Ct. 461. To be justiciable, a controversy must be "a real and substantial controversy admitting of specific relief through a decree of a conclusive character, as distinguished from an opinion what the law would be upon a hypothetical state of facts." Aetna, 300 U.S. at 241, 57 S.Ct. 461. Federal courts are not empowered to issue advisory opinions where there is no actual controversy of this nature. See id.; Golden v. Zwickler, 394 U.S. 103, 108, 89 S.Ct. 956, 22 L.Ed.2d 113 (1969) ; Shell Oil Co. v. Noel, 608 F.2d 208, 213 (1st Cir. 1979).
In resolving a Rule 12(b)(1) motion to dismiss an action for lack of standing, the Court must "credit the plaintiff's well-pled factual allegations and draw all reasonable inferences in the plaintiff's favor." Sanchez ex rel. D.R.-S. v. United States, 671 F.3d 86, 92 (1st Cir. 2012) ; see Lyman v. Baker, 954 F.3d 351, 359-60 (1st Cir. 2020) (stating that the same "burden of proof at the pleading stage[ ] and posture towards the facts alleged in the complaint" applies to motions under Rule 12(b)(1) as motions under Rule 12(b)(6)"). To demonstrate constitutional standing, a plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision. Spokeo, Inc. v. Robins, 578 U.S. 330, 136 S. Ct. 1540, 1547, 194 L.Ed.2d 635 (2016). Plaintiffs, as "[t]he part[ies] invoking federal jurisdiction[,] bear[ ] the burden of establishing these elements." Lujan v. Defs. of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992).
Here, PV Properties has adequately framed a controversy within the scope of the Court's Article III authority with respect to PV Properties’ claim against PREPA. PV Properties has pleaded that the value of RECs that it owns has diminished as a result of PREPA's alleged noncompliance with its statutory obligations. Moreover, that injury would be redressed if the Court were to give PV Properties relief by declaring that PREPA has not complied with its alleged duty to purchase RECs from PV Properties and determining that the financial obligations arising out of such purchases are administrative obligations. See Lujan, 504 U.S. at 561-62, 112 S.Ct. 2130 ("[If] the plaintiff is himself an object of the [government's] action (or forgone action) at issue ..., there is ordinarily little question that the action or inaction has caused him injury, and that a judgment preventing or requiring the action will redress it.").
Defendants’ contention that PV Properties has failed to plead an injury because "there is no obligation in law or contract which could compel PREPA to purchase RECs from PV Properties," (Mot. ¶ 23), conflates the question of whether Plaintiff has pleaded a claim upon which relief can be granted with the threshold question of whether the Court has constitutional subject matter jurisdiction of the instant adversary proceeding. "[I]n reviewing the standing question, the court must be careful not to decide the questions on the merits for or against the plaintiff, and must therefore assume that on the merits the plaintiffs would be successful in their claims." City of Waukesha v. EPA, 320 F.3d 228, 235 (D.C. Cir. 2003) ; see Cottrell v. Alcon Lab'ys, 874 F.3d 154, 162 (3d Cir. 2017) ("To maintain this fundamental separation between standing and merits at the dismissal stage, we assume for the purposes of our standing inquiry that a plaintiff has stated valid legal claims."); see also Hochendoner v. Genzyme Corp., 823 F.3d 724, 734 (1st Cir. 2016) ("[S]tanding in no way depends on the merits of the plaintiff's contention that particular conduct is illegal ....") (quoting Warth v. Seldin, 422 U.S. 490, 500, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975) ); United States v. $8,440,190.00 in U.S. Currency, 719 F.3d 49, 62 (1st Cir. 2013) ("Courts should not ... conflate the constitutional standing inquiry with the merits determination that comes later."). "While standing and merits questions frequently overlap, standing is fundamentally about the propriety of the individual litigating a claim irrespective of its legal merits, while a Rule 12(b)(6) inquiry is concerned with the legal merits of the claim itself." Lyons v. Litton Loan Servicing LP, 158 F. Supp. 3d 211, 220 (S.D.N.Y. 2016) (quoting Curtis v. Cenlar FSB, No. 13 CIV. 3007 DLC, 2013 WL 5995582, at *2 (S.D.N.Y. Nov. 12, 2013) ).
Here, Defendants "are not contending that [Plaintiff] is the wrong [party] to bring these legal claims; they are arguing that the claims are simply not legally cognizable," Curtis, 2013 WL 5995582, at *2, because the statutes underlying PV Properties’ claims do not mandate or otherwise provide for the relief sought in the Amended Complaint. (See Mot. ¶ 24 ("Plaintiff's entire claim is based on counter-textual readings of Act 82-2010 as amended by Act 17-2019, neither of which (i) compels PREPA to buy any RECs from any provider, (ii) compels PREPA to contract with PV Properties, or (iii) compels any particular pathway to compliance with Puerto Rico's renewable energy standards."); Reply ¶ 7 ("[A]n enforcement mechanism or statutory grant of action to PV Properties to sue PREPA ... does not exist.").) Such arguments address the merits of the Amended Complaint and not the Court's authority to adjudicate this adversary proceeding. See Town Of Winthrop v. FAA, 535 F.3d 1, 6 (1st Cir. 2008) ("Defendant's argument [that the injury-in-fact requirement is not satisfied because the project would have minimal environmental effects] puts the cart before the horse; it assumes the outcome on the merits in making its preliminary standing objection."); cf. SM Kids, LLC v. Google LLC, 963 F.3d 206, 211-13 (2d Cir. 2020) ("[W]hether a party has the right to enforce a contract ... is distinct from Article III standing and does not implicate subject-matter jurisdiction.... Additional support for this conclusion comes from the Supreme Court's decisions cautioning lower courts from reading jurisdictional limitations into substantive statutory provisions.").
PV Properties has not, however, adequately alleged constitutional standing with respect to any claims against the Oversight Board and Ms. Jaresko. The Amended Complaint does not request any form of relief against the Oversight Board and Ms. Jaresko; rather, it requests only a declaratory judgment that PREPA is obligated to purchase and pay for PV Properties’ RECs. (Am. Compl. at 9; see also Opp. ¶ 27 ("[N]o relief is requested against the Oversight Board or Ms. Jaresko.").) The Amended Complaint also does not allege that those defendants have a duty, or even authority, to direct PREPA to purchase RECs from PV Properties. Instead, the Amended Complaint merely describes the Oversight Board in general terms (see Am. Compl. ¶ 5 ("[T]he Oversight Board was created under Section 2121(b)(1) of [PROMESA] as an ‘entity within the Commonwealth government’.")), and conclusorily states that Ms. Jaresko (in her capacity as the Oversight Board's Executive Director) "is empowered to authorize the acquisition of Plaintiff's RECs by PREPA." (Am. Compl. ¶ 6.) Without more, the Amended Complaint neither pleads an injury that is fairly traceable to the challenged conduct of the Oversight Board and Ms. Jaresko, nor one which may be redressed by a decision granting Plaintiff the relief sought in the Amended Complaint. See Spokeo, Inc., 136 S. Ct. at 1547 ; Hewitt v. Helms, 482 U.S. 755, 761, 107 S.Ct. 2672, 96 L.Ed.2d 654 (1987) ("The real value of the judicial pronouncement [in a declaratory judgment suit]—what makes it a proper judicial resolution of a ‘case or controversy’ rather than an advisory opinion—is in the settling of some dispute which affects the behavior of the defendant towards the plaintiff. " (emphasis in original)); Am. Freedom Def. Initiative v. Lynch, 217 F. Supp. 3d 100, 105-06 (D.D.C. 2016) (concluding that plaintiffs failed to satisfy causation and redressability requirements where defendant—the attorney general—lacked authority to enforce the statute challenged by the plaintiffs), aff'd sub nom. Am. Freedom Def. Initiative v. Sessions, 697 F. App'x 7 (D.C. Cir. 2017).
The statutes cited by PV Properties do not—and cannot—establish constitutional subject matter jurisdiction. (See Opp. ¶¶ 35-36, 38-39 (citing, inter alia, 28 U.S.C. §§ 1331, 2201, and 2202 and 48 U.S.C. §§ 2126 and 2166 ).) The Declaratory Judgment Act does not expand the scope of the Court's constitutional subject matter jurisdiction. See Ernst & Young v. Depositors Econ. Prot. Corp., 45 F.3d 530, 534 (1st Cir. 1995) ("The [Declaratory Judgment] Act does not itself confer subject matter jurisdiction, but, rather, makes available an added anodyne for disputes that come within the federal courts’ jurisdiction on some other basis."). The statutes cited by PV Properties that do confer subject matter jurisdiction on the Court, if applicable, only establish statutory subject matter jurisdiction. PV Properties must also demonstrate that the Court has constitutional authority to adjudicate the case before it. See United States House of Representatives v. Burwell, 130 F. Supp. 3d 53, 65 (D.D.C. 2015) ("A federal court must assure itself of both constitutional and statutory subject matter jurisdiction."); Gladstone Realtors v. Vill. of Bellwood, 441 U.S. 91, 100, 99 S.Ct. 1601, 60 L.Ed.2d 66 (1979) ("In no event ... may Congress abrogate the Art. III minima ....").
Accordingly, the Amended Complaint is dismissed as against the Oversight Board and Ms. Jaresko pursuant to Rule 12(b)(1). The Court will next address whether the Amended Complaint states a claim upon which relief can be granted with respect to PREPA.
2. Failure to State a Claim Upon Which Relief Can Be Granted
Defendants move pursuant to Federal Rule of Civil Procedure 12(b)(6) to dismiss the Complaint for failure to state a claim upon which relief can be granted. To survive a motion to dismiss for failure to state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6), a complaint must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The court accepts as true the non-conclusory factual allegations in the complaint and draws all reasonable inferences in the plaintiff's favor. Mississippi Pub. Emps.’ Ret. Sys. v. Boston Scientific Corp., 523 F.3d 75, 85 (1st Cir. 2008). The court "may consider ‘documents the authenticity of which are not disputed by the parties,’ ‘documents central to plaintiffs’ claim,’ and ‘documents sufficiently referred to in the complaint.’ " Claudio-De Leon v. Sistema Universitario Ana G. Mendez, 775 F.3d 41, 46 (1st Cir. 2014) (quoting Alternative Energy, Inc. v. St. Paul Fire & Marine Ins. Co., 267 F.3d 30, 33 (1st Cir. 2001) ). The complaint must allege enough factual content to nudge a claim "across the line from conceivable to plausible." Ashcroft v. Iqbal, 556 U.S. 662, 680, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Twombly, 550 U.S. at 570, 127 S.Ct. 1955 ).
A. Private Right of Action
Defendants principally argue that the Amended Complaint fails to state a claim against PREPA because no law requires PREPA to purchase RECs to comply with the Renewable Portfolio Standard, and no law requires PREPA to buy RECs from PV Properties in particular. (See, e.g., Mot. ¶ 30.) As a result, Defendants contend that PV Properties lacks a right to seek judicial enforcement of the Renewable Portfolio Standard. (Mot. ¶¶ 25, 28 (arguing that there is no "citizen suit provision granting [PV Properties] the ability to pursue such an action").) In response, Defendants assert that, although there are three potential methods through which PREPA may comply with the Renewable Portfolio Standard (namely, self-generation of renewable energy, purchasing renewable energy from others, and purchasing RECs), two of the three methods are unavailable to PREPA:
PREPA, as a public entity, has to comply with the [Renewable Portfolio Standard], as to which Puerto Rico's legislature has established three (3) options for PREPA doing so, as indicated by the Defendants, leaving the Defendants with a factual problem since of the three options (1) PREPA has no self production of renewable energy; (2) PREPA has no capacity to acquire and inject into its electrical grid sufficient private renewable energy sources to comply with the [Renewable Portfolio Standard], due to the lack of contractual renewable energy sources on the part of PREPA and the lack of available private energy production sources ....
(Opp. ¶ 33.) Accordingly, PV Properties contends that PREPA is left with "only [one] option, which is to comply with the [Renewable Portfolio Standard] legal mandate by acquiring the RECs, in the instant case, as requested in the [Amended] Complaint." (Opp. ¶ 33.)
PV Properties’ argument in this regard is not sufficient to state a claim. The Amended Complaint does not plead facts to support the Opposition's assertion that PREPA is unable to comply with the Renewable Portfolio Standard by means other than the purchase of RECs, and "[f]actual allegations made for the first time in a responsive memorandum are not properly considered in evaluating the sufficiency of a complaint under Rule 12(b)(6)." Huertas Leon v. Colon-Rondon, 376 F. Supp. 3d 167, 183 (D.P.R. 2019) (quoting Winne v. Nat'l Collegiate Student Loan Tr. 2005-1, No. 1:16-CV-00229-JDL, 2017 WL 3573813, at *6 (D. Me. Aug. 17, 2017) ); see also Glaros v. Perse, 628 F.2d 679, 681 (1st Cir. 1980) ("[W]e must disregard these additional allegations, because in reviewing the dismissal of a complaint, our focus is necessarily limited to the allegations contained in the complaint itself."). Even if the Amended Complaint could be construed (or further amended) to allege plausibly that purchasing RECs is the only method available to PREPA to comply with the Renewable Portfolio Standard, the Amended Complaint does not plead any facts that support Plaintiff's argument that PREPA must acquire RECs from PV Properties to meet the standard, as opposed to acquiring RECs from others.
Furthermore, even if Plaintiff were to cure those two deficiencies in a further amended complaint, it would only demonstrate that PREPA has an obligation to purchase RECs from PV Properties. It would not, however, demonstrate that there is a private right of action and private remedy available to PV Properties to enforce that obligation for its own benefit.
"[A]n individual seeking to sue under an implied right of action ‘must show that the statute manifests an intent ‘to create not just a private right but also a private remedy.’ " Colon-Marrero v. Velez, 813 F.3d 1, 15-16 (1st Cir. 2016) (quoting Alexander v. Sandoval, 532 U.S. 275, 286, 121 S.Ct. 1511, 149 L.Ed.2d 517 (2001) ). Although neither Plaintiff nor Defendants has discussed the legal standard applicable to determining whether a party may assert a private right of action to enforce a statute under Commonwealth law, "[t]he Court looks to federal law for guidance on this question of statutory interpretation." Brown v. J&W Grading, Inc., 390 F. Supp. 3d 337, 357 (D.P.R. 2019) (citing Rodriguez v. Bennett, 540 F. Supp. 648, 651 (D.P.R. 1982) ); see also Diaz-Ramos v. Hyundai Motor Co., 501 F.3d 12, 17 (1st Cir. 2007) (looking to statutory text, and principally citing federal case law, in determining that Puerto Rico Consumer Class Action Act and Puerto Rico Antitrust Act do not provide private rights of action for unfair trade practices under the Puerto Rico Antitrust Act); Rodriguez v. Bennett, 540 F. Supp. at 651 ("Although these cases deal with [determining whether private rights of action exist under] federal statutes we find their criteria helpful to the present inquiry."). Accordingly, "[t]he determination of whether a ... statute creates a private right ... turns on [the legislature's] intent." Rolland v. Romney, 318 F.3d 42, 51 (1st Cir. 2003) ; Rodriguez v. Bennett, 540 F. Supp. 648, 651 (D.P.R. 1982) ("The central task in such a situation is to determine whether the legislature intended to create a private remedy from the statute involved.").
Although courts traditionally applied the four-factor test set forth in Cort v. Ash, 422 U.S. 66, 78, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975), to assess whether a federal statute confers a private right of action, "[t]he Supreme Court has clarified since Cort that whether Congress intended to provide a private right of action—which is one of the Cort factors—is ‘[t]he central inquiry,’ and that the other three factors are entitled to considerably less weight." Buntin v. City of Bos., 857 F.3d 69, 75 n.6 (1st Cir. 2017). "Statutory intent ... is determinative. Without it, a cause of action does not exist and courts may not create one, no matter how desirable that might be as a policy matter, or how compatible with the statute." Id. (quoting Alexander v. Sandoval, 532 U.S. 275, 287, 121 S.Ct. 1511, 149 L.Ed.2d 517 (2001) ).
Here, neither Plaintiff's pleadings nor the Court's review of Act 82-2010, as amended by Act 17-2019, has identified evidence of any intention to provide for judicial enforcement of the Renewable Portfolio Standard by private actors. Rather, Act 82-2010 contemplates regulation and enforcement of the Renewable Portfolio Standard by the Puerto Rico Energy Bureau. See, e.g., 12 L.P.R.A. §§ 8122 (providing that "orders, resolutions, and regulations issued or promulgated by the Puerto Rico Energy [Bureau] to enforce the goals established herein, shall apply to any person subject to the Renewable Portfolio Standard"), 8125 (enumerating PREB's powers, including enforcement powers such as the ability to file lawsuits and to issue cease-and-desist orders, fines, and other administrative remedies), 8133 (setting out procedures by which PREB can confirm compliance with the Renewable Portfolio Standard, provide notice of noncompliance, and issue fines). Accordingly, the facts alleged in the Amended Complaint "lend themselves to no viable theories of recovery," Phoung Luc v. Wyndham Mgmt. Corp., 496 F.3d 85, 88 (1st Cir. 2007), and the Amended Complaint fails to state a claim upon which relief can be granted. See Diaz-Ramos, 501 F.3d at 17 (affirming dismissal of claims under Puerto Rico Consumer Class Action Act because "nothing in the CCAA—a procedural class action statute—provides any indication that the Puerto Rico legislature intended to create a substantive right of action for class action suits").
B. Section 305 of PROMESA
Section 305 of PROMESA provides as follows:
Subject to the limitations set forth in subchapters I and II of this chapter, notwithstanding any power of the court, unless the Oversight Board consents or the plan so provides, the court may not, by any stay, order, or decree, in the case or otherwise, interfere with—
(1) any of the political or governmental powers of the debtor;
(2) any of the property or revenues of the debtor; or
(3) the use or enjoyment by the debtor of any income-producing property.
48 U.S.C.A. § 2165 (West 2017). "Section 305 [is] respectful and protective of the status of the Commonwealth and its instrumentalities as governments, much like section 904 of the municipal bankruptcy code respects and protects the autonomy of states and their political subdivisions." Fin. Oversight & Mgmt. Bd. for P.R. v. Ad Hoc Grp. of PREPA Bondholders (In re Fin. Oversight & Mgmt. Bd. for P.R.), 899 F.3d 13, 21 (1st Cir. 2018).
Section 305 of PROMESA prohibits the Court from providing the relief sought by Plaintiff. The Amended Complaint requests a declaratory judgment obligating PREPA to enter into a business transaction that would require it to use its financial resources in a particular way. (See Am. Compl. at 9 (requesting "judgment under 28 U.S.C. §§ 2201 and 222 ... declaring that pursuant to Act 17-2019 PREPA is obligated to acquire PV Properties REC's"); see also Opp. ¶ 27 ("The relief requested in the Complaint is directed to obtaining a declaratory judgment deciding that PREPA is obligated to acquire Plaintiff's RECs and to pay for those generated after the filing of PREPA's Title III Petition.").) Although the Amended Complaint frames this relief as a declaratory judgment and PV Properties contends that the relief sought would not "interfere with any of PREPA's political or governmental powers or any of its property or services" (Opp. ¶ 52), "[s]ection 305's prohibition is not limited to remedies that are directly coercive." ACP Master, Ltd. v. Commonwealth of Puerto Rico (In re Fin. Oversight & Mgmt. Bd. for P.R.), 300 F. Supp. 3d 328, 341 (D.P.R. 2018), aff'd sub nom., Aurelius Capital Master, Ltd. v. Commonwealth of Puerto Rico (In re Fin. Oversight & Mgmt. Bd. for P.R.), 919 F.3d 638 (1st Cir. 2019). Section 305 therefore precludes the Court from issuing declaratory judgments that interfere with a Title III debtor's handling and disbursement of its property absent the consent of the Oversight Board or authorization of the action in a plan of adjustment, neither of which is present here. See Aurelius Capital Master, Ltd., 919 F.3d at 648 (holding that declaratory relief "direct[ing] the Commonwealth about how it must handle and disburse" certain revenues would constitute "an impermissible interference under Section 305 of PROMESA without the Board's consent or relevant authorization in a plan of adjustment").
The Amended Complaint also requests that the Court require PREPA to pay for the RECs that it is allegedly required to purchase from PV Properties by allowing an administrative expense claim in PV Properties’ favor. (See Am. Compl. at 9 (asking that the Court declare that PREPA is obligated "to pay for those REC's generated by PV Properties after the filing of PREPA Title III petition, as an administrative expense under 11 U.S.C. § 507(a)(2)"); see also Opp. ¶ 61 ("Plaintiff's RECs, which constitute the means by which PREPA can comply with its statutory obligations ... fall within the scope of ‘actual, necessary’ costs and expenses of preserving its estate.").) Administrative expense priority status generally requires, among other things, a right to payment "ar[ising] from a postpetition transaction with the debtor estate." Woburn Assocs. v. Kahn (In re Hemingway Transp., Inc.), 954 F.2d 1, 5 (1st Cir. 1992). Plaintiff has not pleaded that any such transaction between PV Properties and PREPA has occurred, and the Court's inability to require PREPA to engage in such a transaction precludes allowance of an administrative expense claim arising therefrom.
Accordingly, the Amended Complaint is dismissed as against PREPA for failure to state a claim upon which relief can be granted.
III.
CONCLUSION
For the foregoing reasons, Defendants’ Motion is granted, and Plaintiff's Amended Complaint is dismissed as against the Oversight Board and Ms. Jaresko for lack of subject matter jurisdiction, and dismissed as against PREPA for failure state a claim upon which relief can be granted.
This Opinion and Order resolves Docket Entry No. 12 in Adv. Proc. No. 20-00142-LTS.
SO ORDERED.