REDONDO CONSTRUCTION CORPORATION v. AUTORIDAD DE CARRETERAS DE PUERTO RICO

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Case:03-00194-ESL Doc#:163 Filed:03/30/10 Entered:03/31/10 10:06:51 Desc: Main
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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF PUERTO RICO

In re:
REDONDO CONSTRUCTION CORPORATION, : Case No. 02-02887 (ESL)

Debtor : Chapter 11

REDONDO CONSTRUCTION CORPORATION,

Plaintiff,
Vv. : Adv. No. 03-0192
: Adv. No. 03-0194
PUERTO RICO HIGHWAY AND : Adv. No. 03-0195

TRANSPORTATION AUTHORITY, ay Gem
FILED & ENTE

Defendant

DECISION AND ORDER

On March 4, 2010, the Puerto Rico Highway and Transportation
Authority (“PRHTA”) filed appeals to the United States District Court
for the District of Puerto Rico of judgments entered against it in
these three adversary proceedings in the amounts of $643,545.77,
$10,402,099.66 and $912,874.23, respectively. On March 5, 2010, the
debtor, Redondo Construction Corp. (“Redondo”), filed motions
requesting execution of the judgments and on March 19, 2010, PRHTA
filed motions for stay of execution. PRHTA’s primary basis for
requesting stay pending appeal is that denial of the stay could
result in the total loss of the property/money at issue, if the
Court’s awards are reversed on appeal, since the funds would go to
Redondo’s litigation trust for disbursement to creditors of Redondo.

PRHTA seeks to maintain the status quo pending resolution of its

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appeals.

A motion for stay pending appeal is filed pursuant to Federal
Rule of Bankruptcy Procedure 8005. Allowance of a motion for stay
pending appeal of a judgment is discretionary. Courts consider the
traditional four-part standard applicable to preliminary

injunctions. See Acevedo-Garcia v. Vera-Monroig, 296 F.3d 13, 16

(lst Cir. 2002). The Court must consider “(1) whether the
applicant has made a strong showing of success on the merits; (2)
whether the applicant will be irreparably harmed absent injunctive
relief; (3) whether issuance of the stay will injure other parties;
and (4) where the public interest lies.” Id. at 16 n. 3. “‘The
sine qua non [of the stay pending appeal standard] is whether the
[movants] are likely to succeed on the merits.’” Id. at 16

(quoting Weaver v. Henderson, 984 F.2d 11, 12 (1st Cir. 1993)).

However, the degree of likelihood of success is not determinative
as it must be balanced with the hardships caused to the parties if
the injunction is not granted. If plaintiff’s showing of probable
success on the merits is uncertain, he may be entitled to a
preliminary injunction if he demonstrates a strong probability that

he will be injured if the court fails to act. 11A Federal Practice

and Procedure, Civ., § 2948.3 (2d Ed. 2009). To establish

irreparable harm the movant does not need to show that the
injunctive relief will be fatal to the business, only that its

legal remedies are inadequate. Ross-Simons of Warwick, Inc. v.

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Baccarat, Inc., 102 F.3d 12, 15 (1% Cir. 1996). “If the plaintiff

suffers a substantial injury that is not accurately measurable or
adequately compensable by money damages, irreparable harm is a
natural sequel.” Id.

The Court concludes that PRHTA has some likelihood of
prevailing on the merits of the appeals or in having the judgments
reduced. The Court notes that the judgments were issued by the
Honorable Gerardo Carlo after a ten day trial, in which extensive
documentary evidence was offered and numerous witnesses testified.
Moreover, this court cannot conclude that PRHTA would have an
adequate remedy of legal damages if the funds are dissipated
through the litigation trust, since Redondo is not solvent. The
court likewise cannot conclude that Redondo will be harmed by the
issuance of the stay, except by the further delay inherent in the
appeals process. While there is a public interest favoring
Redondo’s ultimate collection of the amounts owed, the public
interest would not lie in distributing the funds to Redondo’s
creditors, absent resolution of the appeals. Accordingly, the
court will grant the motions for stay pending appeal to maintain

the status quo pending their resolution.

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ORDER
Wherefore IT IS ORDERED that the motions for stay of execution
of judgment, filed by the Puerto Rico Highway and Transportation
Authority, shall be, and are hereby GRANTED.
SO ORDERED.

San Juan, Puerto Rico, this 30° day of March, 2010.

BY THE COURT:

“GNRIQUE S. LAMOUTTE
U.S. Bankruptcy Judge