The U.S. Court of Appeals for the First Circuit reversed a district court decision that would have allowed Belia Arlene-Ocasio and Efraín Colón-Damiani to collect attorney fees after successfully challenging Puerto Rico's voting procedures under Section 1983. The plaintiffs had obtained permanent injunctive relief regarding early voting rights for voters over 60 during the COVID-19 pandemic in 2020.
The case centered on whether the attorney fee award was subject to discharge under Puerto Rico's debt restructuring plan, which was confirmed in 2022 under the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA). The plan discharged all claims against Puerto Rico that arose before the plan's effective date of March 15, 2022, unless claimants filed proper documentation by specific deadlines.
The plaintiffs argued their fee claim should be exempt from discharge on several grounds: that defendants waived the discharge defense by not raising it timely, that their claim arose after the plan took effect, that it was exempt under federal regulatory law provisions, and that they received inadequate notice of filing deadlines. The First Circuit rejected all of these arguments.
The court emphasized that discharge under bankruptcy law 'voids any judgment' and 'operates as an injunction' whether or not the debtor waives it, making the discharge defense non-waivable. Since the plaintiffs failed to file proof of their administrative expense claim by the required deadline and their claim arose before the plan's effective date, it was automatically discharged.