PROMESA Title III Discharge Bars Collection of § 1988 Fee Awards When Claimants Had Actual Knowledge and Missed the Administrative-Expense Bar Date

I. Introduction

In Ocasio v. Comision Estatal de Elecciones (1st Cir. Apr. 1, 2026), the First Circuit addressed whether plaintiffs who won a federal voting-rights injunction in 2020 could later collect an attorneys’ fee award under 42 U.S.C. § 1988 despite Puerto Rico’s confirmed debt-adjustment plan under the Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”).

The parties were Belia Arlene-Ocasio and Efraín Colón-Damiani (plaintiffs/appellees) and the Comisión Estatal de Elecciones (“CEE”) and its President in his official capacity (defendants/appellants). Plaintiffs prevailed on constitutional claims challenging election procedures during COVID-19 and later obtained an attorneys’ fee award of roughly $64,415.

The key issues on appeal were:

whether PROMESA’s Title III discharge and injunction barred collection of a § 1988 fee award;
when the fee “claim” arose for discharge purposes;
whether PROMESA’s “federal police or regulatory” nondischargeability clause (48 U.S.C. § 2164(h)) applied;
whether due process required direct notice of the administrative-expense bar date to these plaintiffs; and
whether discharge could be waived by litigation delay or forfeiture.

II. Summary of the Opinion

The First Circuit reversed the district court and held that the plaintiffs’ § 1988 fee claim was discharged and enjoined under Puerto Rico’s PROMESA Title III Confirmed Plan. Because the fee claim was a post-petition claim against Puerto Rico that arose before the Plan’s effective date, and because plaintiffs did not file a timely administrative-expense request by the bar date, the Confirmed Plan treated the claim as “forever barred.”

The court rejected four arguments advanced by plaintiffs:

No waiver: discharge under 11 U.S.C. § 524(a) is automatic and “nonwaivable.”
Timing: the claim did not arise only upon entry of the fee order; it arose from the underlying pre-effective-date events giving rise to liability.
Police/regulatory exception: § 1983 and § 1988 are not “Federal police or regulatory laws” under 48 U.S.C. § 2164(h).
Due process/notice: under 11 U.S.C. § 944(c)(2), actual knowledge of “the case” sufficed; the Bankruptcy Rules cannot impose more demanding notice than the statute.

III. Analysis

A. Precedents Cited

1. PROMESA/Title III framework and discharge mechanics

In re Fin. Oversight & Mgmt. Bd. for P.R., 899 F.3d 13 (1st Cir. 2018): Used to situate PROMESA Title III as “akin to municipal debt restructuring under Chapter 9,” supporting the opinion’s reliance on incorporated Bankruptcy Code discharge concepts.
Municipality of San Juan v. Puerto Rico, 919 F.3d 565 (1st Cir. 2019): Cited for Title III petition timing and for illustrating the type of “federal police or regulatory laws” (the opinion notes the Medicaid Act example) contemplated by PROMESA’s nondischargeability provision.
In re Fin. Oversight & Mgmt. Bd. for P.R., 636 B.R. 1 (D.P.R. 2022): Central authority describing the Confirmation Order, the scope of discharge and injunction, and the administrative-expense bar date regime the First Circuit applied.
In re Fin. Oversight & Mgmt. Bd. for P.R., 32 F.4th 67 (1st Cir. 2022): Cited for the Plan’s Effective Date and procedural posture, anchoring the temporal inquiry.
In re Fin. Oversight & Mgmt. Bd. for P.R., 7 F.4th 31 (1st Cir. 2021): Supports that PROMESA incorporates Bankruptcy Code administrative-expense provisions (11 U.S.C. §§ 503, 507(a)(2)), validating the administrative-expense characterization and bar date consequences.

2. Bar dates, “fresh start,” and administrative-expense practice

Ellis v. Westinghouse Elec. Co., LLC, 11 F.4th 221 (3d Cir. 2021): Cited for the rationale of bar dates (“fresh start”) and for the concept that administrative-expense claims must be timely requested; also referenced for the possibility of late filing “for cause” under 11 U.S.C. § 503(a).
In re Fin. Oversight & Mgmt. Bd. for P.R., 781 F. Supp. 3d 1 (D.P.R. 2025): Cited in a footnote regarding extension of the administrative-expense bar date for select claims—reinforcing that bar dates are real, court-supervised deadlines with defined exceptions.

3. Nonwaivability of discharge

In re Gurrola, 328 B.R. 158 (9th Cir. BAP 2005): Supports the conclusion that 11 U.S.C. § 524(a) renders discharge an “absolute, nonwaivable defense,” directly answering plaintiffs’ forfeiture/waiver theory.

4. When a claim “arises” (fees tied to underlying conduct, not judgment date)

In re Hemingway Transp., Inc., 954 F.2d 1 (1st Cir. 1992): Used to emphasize bankruptcy’s broad treatment of monetary obligations and to analyze fee claims by reference to the underlying conduct/transaction and relation to estate preservation or post-petition operations.
In re Munce's Superior Petroleum Prods., Inc., 736 F.3d 567 (1st Cir. 2013): Supports focusing on whether liabilities (including attorneys’ fees) are attributable to post-petition violations, reinforcing the conduct-based accrual approach.
In re Mammoth Mart, Inc., 536 F.2d 950 (1st Cir. 1976): Provides the foundational “debtor-in-possession’s actions” framework for determining when liability arises in contexts involving post-petition conduct.
O'Loghlin v. Cnty. of Orange, 229 F.3d 871 (9th Cir. 2000): Cited to underscore the reorganization policy concern: claims should not evade bankruptcy treatment merely due to litigation timing.
Marrama v. Citizens Bank of Mass., 549 U.S. 365 (2007): Invoked for the “fresh start” purpose of bankruptcy, framing why allowing late-emerging liabilities would undermine reorganization.

5. Meaning of “Federal police or regulatory laws” and the nature of §§ 1983/1988

Anderson v. Warner, 451 F.3d 1063 (9th Cir. 2006) and Maine v. Thiboutot, 448 U.S. 1 (1980): Used to establish that § 1983 and § 1988 are remedial/enforcement vehicles rather than sources of substantive regulatory obligations—critical to rejecting the § 2164(h) exception.
Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996) and Metro. Life Ins. v. Massachusetts, 471 U.S. 724 (1985): Cited to explain “police powers” as legislation protecting health and safety, supporting the conclusion that the exception targets substantive regulatory obligations (environment, public health/safety), not litigation fee remedies.

6. Due process notice, “known creditors,” and statutory burden-shifting

In re Arch Wireless, Inc., 534 F.3d 76 (1st Cir. 2008): The centerpiece for plaintiffs’ notice argument. The court distinguishes it: Arch Wireless involved statutory silence about notice, while here 11 U.S.C. § 944(c)(2) expressly makes discharge turn on “notice or actual knowledge of the case.”
Tulsa Prof'l Collection Servs. Inc. v. Pope, 485 U.S. 478 (1988) and Mullane v. Cent. Hanover Bank & Tr. Co., 339 U.S. 306 (1950): Used (via Arch Wireless) to define “known” vs. “unknown” creditors and what process is due in each category.
In re Medaglia, 52 F.3d 451 (2d Cir. 1995): Relied upon (through Arch Wireless) for the proposition that when the statute warns “actual knowledge of the case” is enough, creditors cannot assume heightened formal notice.
H.R. Rep. No. 94-686, 94th Cong., 1st Sess. 34 (1975): Legislative history supporting the interpretation that “knowledge of the case” means general knowledge of the bankruptcy proceedings.

7. Statutory construction principles and hierarchy of authority

Sony BMG Music Ent. v. Tenenbaum, 660 F.3d 487 (1st Cir. 2011) and Hillman v. Maretta, 569 U.S. 483 (2013): Support the “express exceptions” canon—courts should not create additional exceptions beyond those Congress enumerated.
South Carolina v. Catawba Indian Tribe, Inc., 476 U.S. 498 (1986) and Colautti v. Franklin, 439 U.S. 379 (1979): Used for the rule against interpretations that render statutory text inoperative—supporting rejection of extra-statutory notice carveouts.
Aguilar v. U.S. Immigr. & Customs Enf't, 510 F.3d 1 (1st Cir. 2007): Cited for enforcing statutes as written and avoiding frustration of Congress’s purpose, applied to § 944(c)(2).
In re Edmonston, 107 F.3d 74 (1st Cir. 1997), In re Smith, 999 F.3d 452 (6th Cir. 2021), and In re Jastrem, 253 F.3d 438 (9th Cir. 2001): Support the supremacy of the Bankruptcy Code over the Bankruptcy Rules where they conflict—critical to rejecting plaintiffs’ reliance on Rules-based notice requirements to override § 944(c)(2).

8. Cleanup citations

Díaz-Báez v. Alicea-Vasallo, 22 F.4th 11 (1st Cir. 2021) and Johansen v. Liberty Mut. Grp., 118 F.4th 142 (1st Cir. 2024): Cited at the end in a manner consistent with appellate disposition practice; they do not materially drive the primary holding.

B. Legal Reasoning

1. The court frames the fee award as a bankruptcy “claim” subject to PROMESA discharge

The opinion begins from PROMESA’s incorporation of core Bankruptcy Code provisions and the Confirmed Plan’s broad discharge of pre-effective-date claims, including claims “whether or not … reduced to judgment.” By emphasizing the definition of “claim” and “debt” in the Bankruptcy Code (as incorporated), the court rejects the idea that a debtor can be bound by a later-entered fee judgment if the underlying right to payment is dischargeable.

2. Discharge is not an affirmative defense that can be waived by delay

Plaintiffs’ waiver argument ran into the text of 11 U.S.C. § 524(a), which states discharge operates “whether or not discharge of such debt is waived.” The First Circuit treats this as decisive: discharge voids judgments and imposes an injunction automatically, so litigation choices (including late invocation) cannot create liability Congress and the Confirmed Plan extinguish.

3. The “arising” date of a § 1988 fee claim is tied to the underlying conduct, not the date of the fee order

Plaintiffs attempted to exploit the district court’s delayed fee ruling by arguing the claim “arose” only when the court awarded fees. The First Circuit rejected that approach on three levels:

Text/definition: discharge covers rights to payment “whether or not … reduced to judgment.”
Accrual framework: First Circuit precedent looks to the underlying transaction/violation that generated liability (and whether fees relate to post-petition operations or post-petition misconduct), not the later procedural moment of liquidation.
Bankruptcy policy: allowing judicial delay to determine dischargeability would undermine the “fresh start” and invite “unexpected liabilities” post-reorganization.

Applied to these facts, the constitutional violation litigation and the fee motion occurred well before the Plan Effective Date, so the fee claim was within the dischargeable universe (subject to administrative-expense procedures).

4. PROMESA’s police/regulatory carveout does not cover § 1983/§ 1988 fee obligations

The court reads 48 U.S.C. § 2164(h) as targeting substantive regulatory compliance obligations—particularly those that protect the public through environmental, health, and safety regimes—and associated penalties and orders.

Plaintiffs’ strategy was to characterize their fee entitlement as an “obligation arising under” federal police/regulatory law by pointing to § 1983 and § 1988. The First Circuit’s critical move is to insist on the difference between:

Substantive obligation-creating law (e.g., a regulatory statute requiring certain conduct), and
Enforcement vehicles/remedies (like § 1983 and fee-shifting under § 1988), which do not themselves impose the underlying regulatory duties on the debtor.

Because § 1983 and § 1988 are remedial rather than substantive “police or regulatory” regimes, the exception does not apply.

5. Due process notice is governed by § 944(c)(2)’s “notice or actual knowledge of the case” standard

Plaintiffs argued they were “known” creditors and thus constitutionally entitled to direct notice of the administrative-expense bar date. The First Circuit narrows the dispute by focusing on statutory architecture:

In In re Arch Wireless, Inc., the discharge provisions were “written unequivocally … without reference to the notice provided,” so due process filled the gap and required direct notice of key dates for known creditors.
Here, 11 U.S.C. § 944(c)(2) expressly conditions discharge on whether the entity “had neither notice nor actual knowledge of the case.” Once a claimant has notice/knowledge of the bankruptcy proceedings, the burden shifts to the claimant to inquire and protect its interests.

The court finds plaintiffs had actual knowledge because defendants referenced Title III in their Answer and other filings. That knowledge defeated plaintiffs’ demand for heightened notice of the bar date as a constitutional requirement.

6. Bankruptcy Rules cannot override the Bankruptcy Code’s notice standard

Plaintiffs invoked the Federal Rules of Bankruptcy Procedure (e.g., notice rules) as an independent source requiring direct notice. The First Circuit acknowledged the Rules’ notice expectations but held that:

the Rules do not themselves create a discharge exception for failure to comply; and
where a Rule conflicts with the Code’s statutory standard, the Code controls.

C. Impact

Fee awards as dischargeable administrative-expense claims: Civil-rights plaintiffs litigating against Puerto Rico or its instrumentalities during Title III should treat potential fee claims as bankruptcy-sensitive assets requiring timely administrative-expense filings—regardless of whether a district court has ruled on fees.
No “litigation-delay workaround”: The opinion forecloses arguments that a claim becomes nondischargeable merely because a court liquidates it after the plan effective date. That principle can extend beyond § 1988 to other fee-shifting and cost regimes.
Narrowing § 2164(h): The decision signals a restrained approach to PROMESA’s police/regulatory nondischargeability clause, emphasizing substantive regulatory obligations rather than remedial enforcement mechanisms.
Notice doctrine tailored to § 944(c)(2): Claimants with actual knowledge of Title III cannot rely on due-process arguments to demand individualized notice of bar dates, even if they are “known” claimants in a colloquial sense. Actual knowledge triggers a duty of inquiry.
Operational lesson for litigants: Parties suing Puerto Rico entities must coordinate litigation strategy with Title III claim-preservation (including monitoring bar dates), or risk “forever barred” treatment.

IV. Complex Concepts Simplified

Confirmed Plan / Plan of Adjustment: A court-approved restructuring blueprint that sets who gets paid, how, and when; it also typically discharges old debts and enjoins collection.
Discharge and discharge injunction (11 U.S.C. § 524): “Discharge” wipes out certain debts; the “injunction” is a court-backed ban on trying to collect them. Under § 524(a), it applies automatically.
Administrative expense (11 U.S.C. § 503): A post-petition claim treated as a cost of the restructuring process. These often must be requested by a special deadline and can be “forever barred.”
Bar date: A final deadline to file claims (or requests for payment). Missing it can eliminate recovery even if the claimant would otherwise be entitled to payment.
“Arising” of a claim: Bankruptcy often looks to when the underlying events creating liability occurred, not when a court later enters a judgment fixing the amount.
Police or regulatory laws (48 U.S.C. § 2164(h)): Substantive public-protection laws (environment, health, safety) whose compliance obligations Congress did not want discharged in PROMESA. The court treated § 1983/§ 1988 as enforcement/remedy statutes, not such substantive regimes.
“Actual knowledge of the case” (11 U.S.C. § 944(c)(2)): If a claimant knows the bankruptcy is happening, the statute can treat that as enough to bind the claimant to deadlines—even without individualized notice.

V. Conclusion

Ocasio v. Comision Estatal de Elecciones establishes a clear, practical rule for PROMESA Title III: a § 1988 attorneys’ fee claim against Puerto Rico (or covered instrumentalities) is dischargeable and subject to the Confirmed Plan’s injunction when it arises from pre-effective-date events and the claimant, despite actual knowledge of the Title III case, fails to file a timely administrative-expense request by the bar date.

The opinion’s broader significance lies in (1) reinforcing the nonwaivable, automatic character of discharge; (2) tying “claim arising” to underlying conduct rather than later judicial liquidation; (3) constraining PROMESA’s police/regulatory exception to substantive regulatory obligations; and (4) aligning due-process notice expectations with the specific statutory notice standard of § 944(c)(2).