United States Court of Appeals
For the First Circuit
No. 23-1314
INSTITUTO MÉDICO DEL NORTE, INC.,
Debtor,
INSTITUTO MÉDICO DEL NORTE, INC.,
Appellant,
v.
GREENGIFT CAPITAL, LLC,
Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Pedro A. Delgado-Hernández, U.S. District Judge]
Before
Gelpí, Thompson, and Montecalvo,
Circuit Judges.
Rafael A. González-Valiente, with whom Godreau & Gonzalez
Law, LLC was on brief, for appellant.
Ramón L. Ramos-Aponte, with whom Gustavo A. Chico-Barris,
Tomás F. Blanco-Pérez, and Ferraiuoli LLC were on brief, for
appellee.
September 2, 2026
THOMPSON, Circuit Judge.
Instituto Médico del Norte, today's debtor/appellant,
has been trying to repay a loan since the 1980s. But Instituto
and Greengift Capital (the current loan-holder and today's
appellee) are in a fierce battle about what, exactly, Instituto's
got to fork over.
We'll fill in the deets shortly, but the SparkNotes is
this. In a recent adversary proceeding1 in bankruptcy court,
Instituto tried to invoke a 1991 agreement to explain why it owed
less on the loan balance than Greengift (and its predecessor
loan-holders) said it did. The bankruptcy court sided with
Greengift. See In re Instituto Médico del Norte, Inc.,
No. 13-08961, 2022 WL 609995, at *7 (Bankr. D.P.R. Mar. 1, 2022).
But admittedly -- and with no disrespect intended
towards the bankruptcy court -- we struggle to make sense of
several key determinations in its dispositive order. We know that
bankruptcy courts are quite busy, and they also don't have an
obligation to make specific findings of fact or to elaborate on
their decisions when resolving motions for summary judgment. See
Grossman v. Berman, 241 F.3d 65, 68 (1st Cir. 2001). But
1"An adversary proceeding is a subsidiary lawsuit within the
larger framework of a bankruptcy case," In re Buscone, 61 F.4th
10, 16 n.1 (1st Cir. 2023) (cleaned up), but it has "great"
similarities to "an ordinary civil action," In re Harrington, 992
F.2d 3, 6 n.3 (1st Cir. 1993).
- 2 -sometimes, a careful statement of reasoning is "a necessary
precondition to intelligent appellate review." Id. We've said
before that "[s]uch an occasion arises when a trial court grants
a motion for summary judgment under circumstances in which the
basis for its ruling is not easily ascertainable from the bare
record." Id. And especially when we're wading in the "byzantine
world of bankruptcy law," Guallini-Indij v. Banco Popular de P.R.,
169 F.4th 64, 70 (1st Cir. 2026), we think "it is risky business
for an appellate court to guess at what the [bankruptcy] court
might have been thinking, and the better course is to remand for
an elaboration of the decision," Grossman, 241 F.3d at 68.
That's the case here. In response to the bankruptcy
court's various orders to cough up some evidence of what's owed,
Instituto offered more than 1,000 pages' worth of documents, as
well as briefs with arguments and specific record citations. And
yet the bankruptcy court (after, admittedly, providing a lot of
background info, such as procedural history and general primers on
Rule 12(b)(6) and Rule 56) unfortunately resolved the case in an
"opinion and order" with only a paragraph of analysis that
(1) lacks any record citation or reference to applicable law and
(2) doesn't make clear the grounds of decision, with multiple
possible interpretations of its reasoning apparent to us. See In
re Instituto, 2022 WL 609995, at *7. That paucity deprives us of
the opportunity to provide meaningful appellate review. So we
- 3 -vacate and remand to the bankruptcy court to take another shot at
it. "And given our inability to parse what happened below . . . we
necessarily explain in considerable detail just why we think remand
is necessary." Rivera-Carrasquillo v. Centro Ecuestre Madrigal,
Inc., 812 F.3d 213, 215 (1st Cir. 2016). We articulate the
specifics of what the bankruptcy court should consider upon remand,
guided by our comments.
SETTING THE SCENE
A. The Loan and the 1991 Agreement(s)
We'll start at the beginning, of course. Back in 1984,
Instituto obtained a loan to the tune of $10,683,230 from Ponce
Bank to build a hospital in Vega Baja, Puerto Rico.
But Instituto and Ponce quickly fell into a dispute.
The dispute's details are admittedly complicated and not
well-documented in the record before us, but here's what we can
glean from the parties' materials: Greengift says that Instituto
quickly found itself "in default with the [l]oan's terms," while
Instituto says that Ponce "refused to make disbursements on the
loan as required by the credit agreement." But either way, Ponce
filed a collections and foreclosure suit against Instituto in 1986.
And then Instituto filed for Chapter 11 bankruptcy in 1987, soon
afterward opening an adversary proceeding against Ponce.
- 4 -Following long negotiations, Instituto and Ponce reached
a settlement in 1991 to end this multi-faceted litigation.2 Yet
the parties have different accounts of what exactly happened in
1991. Instituto says the most critical thing, at least for our
purposes, was that the loan's balance was divided into two distinct
notes going forward: an interest-bearing note for the principal
balance of $10,584,920.17, and a non-interest-bearing note for
past overdue interest of $3,585,388.53. (Put differently, from
then on, interest would accrue on the principal note with an annual
2 As the bankruptcy court noted in another Instituto order
(one that isn't part of today's adversary proceeding), here are
the practical effects of the settlement:
[Instituto] filed a Chapter 11 petition on
February 13, 1987 . . . . After a stipulation
filed between Instituto and Ponce Federal Bank
in June 1990, the petition was voluntarily
dismissed in April 1991. The adversary
proceeding filed by Instituto against Ponce
Federal Bank . . . ended in September 1993
when judgment was entered pursuant to the
[S]tipulation filed by the parties in February
1991.
Instituto Médico del Norte Inc., No. 13-08961, 2022 WL 1721350, at
*2 n.1 (Bankr. D.P.R. May 27, 2022). Our understanding is that
these agreements were not formalized into a confirmed plan, given
Instituto's voluntary dismissal of its bankruptcy petition. The
parties do not detail what happened with the 1986 collection
action, but our examination of the docket revealed that it ceased
at approximately the same time as the 1991 agreements were being
hashed out. See generally Docket, Ponce Fed. Bank, FSB v.
Instituto Médico del Norte, Inc., No. D CD1986-1935 (Bayamon Sup.
Ct.). And no one notes that the Bayamon Superior Court made a
determinative ruling on the collections effort that would
otherwise legally affect the agreements.
- 5 -interest rate of 5.981%, but that other $3.5 million note wouldn't
accrue interest, as Instituto sees it.) Instead of everything
accruing interest, in its telling, Instituto agreed to pay the
interest-bearing note in monthly installments of up to $75,069,
followed by a balloon payment at the end of the payment schedule
worth approximately $4.6 million -- that figure being the remnants
of the principal note, combined with the total value of the
non-interest-bearing note (for which monthly payments were not due
in the interim). Greengift, meanwhile, claims that a single
specific 1991 agreement establishing that two-track payment plan
"does not exist," at least in the sense that there were really
several agreements between Instituto and Ponce executed then.3
B. The Stipulation and the Plan
Fast forward more than twenty years of payments
according to the settlement. In 2013, Instituto again filed for
Chapter 11 bankruptcy. And in the bankruptcy court, Oriental (who
took Ponce's place as the holder of the loan) filed a proof of
claim for $8,951,814.92 with an annual interest rate of 5.98%.4
(Oriental's proof of claim did not distinguish between an
3 In a 2021 filing before the bankruptcy court, Greengift's
predecessor, Condado, identified six different agreements between
the parties in 1991.
4 A "proof of claim" is a "creditor's written statement that
is submitted to show the basis and amount of the creditor's claim"
in order for the creditor "to make a claim for payment out of the
estate in bankruptcy." Proof of Claim, Black's Law Dictionary
(12th ed. 2024).
- 6 -interest-bearing portion of the loan and a non-interest-bearing
portion.)
While Instituto's bankruptcy plan was being worked out,
Instituto and Oriental got into it about how much Oriental should
be paid. But they worked it out. And in 2015, the two filed a
stipulation to the bankruptcy court explaining how Oriental's
claim should be treated in the final bankruptcy plan. Here's the
important language from "The Stipulation":
CLASS 7[5] - The allowed secured claim of
Oriental, is currently being paid $75,069.00
per month according to a payment plan agreed
upon in 1991. This Plan proposes to
restructure the balance of the allowed secured
claim to be amortized in a 19.25 year term
with interest at the annual rate of 5.98% with
a monthly payment of $60,000 for a six (6)
month[] period from the effective date of the
plan; thereafter a monthly payment of
$75,069.00 for a period of fifty four (54)
months with a[n] amortization as agreed in
1991.
(Emphasis ours.) As the reader will later learn, from that "with
[a]n amortization as agreed in 1991" language, Instituto says the
two-note plan purportedly established in 1991 was preserved.
5 "Class 7" is referring to the "Class of Claims." As the
Supreme Court has explained, the Bankruptcy Code "sets forth a
basic system of priority, which ordinarily determines the order in
which the bankruptcy court will distribute assets of the estate."
See Czyzewski v. Jevic Holding Corp., 580 U.S. 451, 457 (2017)
(describing the usual priority order, but noting that there is
"more flexibility for distributions pursuant to Chapter 11
plans"). More simply, where the creditor's claim falls on the
priority list will determine where in line they stand when the
assets are dished out.
- 7 -The final plan (which we uncreatively christen "The
Plan") approved by the bankruptcy court incorporated most of the
above-reproduced language, but not all. First, in the "Classes of
Claims and Equity Interest" section:
CLASS 7 - This class comprises the allowable
secured claim of Oriental Bank and Trust
("Oriental"). . . . A settlement agreement[6]
was reached with Oriental as to the manner in
which this creditor will be paid. The
settlement was approved by this Hon. Court and
its terms and conditions are made part of the
treatment for this creditor under the Plan.
(Underlined in original.) Second, in the "Treatment of Claims"7
section:
CLASS 7 - The allowed secured claim of
Oriental is currently being paid $75,069 per
month according to a payment plan agreed upon
in 1991. This Plan proposes to restructure
the balance of the allowed secured claim to be
amortized in a 231-monthly term with interest
at the annual rate of 5.98%. Monthly
installments of $60,000.00, including
principal and interest, will commence at the
Effective Date of the Plan for six months, and
then 54 monthly payments of $75,069.00. The
remaining balance will be due in a balloon
payment 30 days thereafter. . . . See Summary
of Claims and Plan Payments attached hereto as
Exhibit A-1.
6 This settlement agreement is, as we understand it, the
Stipulation. (More on that later.)
7 Drawing on the above "Class of Claims" section, this portion
of the bankruptcy plan explains the debtor's legal obligations to
the class of creditors therein going forward.
- 8 -(Bolded ours, underlined in original.) Nowhere in either passage
in the Plan, the astute reader will note, is the phrase "a[n]
amortization as agreed in 1991."
So the Plan went into effect in August 2016.
But later on, some wires got crossed. In short,
Instituto and Oriental fell into a spat about the loan's precise
balance after the Plan's Confirmation. The disagreement continued
when Condado 7, another entity, acquired the loan from Oriental.
Condado thought that balance was much higher than Instituto did,
because Instituto believed that the bifurcated note plan remained
in effect -- that is, a significant portion of the loan balance
still wasn't accruing interest, even after the Plan went into
effect.
C. Bankruptcy Court Proceedings
That leads to today's case. In 2021, Instituto reopened
the 2013 bankruptcy case and started an adversary proceeding
against Condado. After some initial matters, Instituto filed an
amended complaint. There, it explained what, precisely, it sought:
• declaratory judgments stating (1) that Instituto
correctly accounted the loan's total and principal
balances; and (2) that the $3.5 million note doesn't
accrue interest, based on the "amortization as agreed in
1991" language;
- 9 -• a civil contempt claim against Oriental and Condado for
violating the Plan by charging interest Instituto didn't
owe; and
• damages.
i. The Motion to Dismiss
Condado soon moved to dismiss the complaint. Among other
points it made, it identified at least six distinct "1991
agreements" that could have been the focus of the Stipulation's
"a[n] amortization as agreed in 1991" language. And it said that
its application of interest was actually consistent with the Plan's
terms.
In response, Instituto moved to convert Condado's motion
to dismiss into a motion for summary judgment. In Instituto's
view, Condado didn't focus on the allegations but instead made
reference to matters outside the pleadings; that, in essence, made
its motion one for summary judgment. And given the way Condado
had presented its motion with facts outside the pleadings
referenced, Instituto also sought more time to get discovery to
properly respond to what it thought, in essence, was a summary
judgment motion; Instituto wanted the chance to depose Oriental
Bank officials and request production of some documents to make
its case.
Condado retorted by observing that the documents it
referenced were incorporated into the pleadings by reference, so
- 10 -it was still fine to proceed under Rule 12. And Condado
alternatively argued that Instituto's discovery wasn't necessary
because, even if the court intended to treat the motion as a
summary judgment motion, Instituto's filing hadn't met the
strictures of Federal Rule of Civil Procedure 56(d), which requires
an affidavit showing specific evidentiary needs to halt summary
judgment proceedings and allow discovery.
To that, Instituto offered a short response largely
repeating points from its original motion.
The bankruptcy court then entered a puzzling order. See
In re Instituto Médico del Norte, Inc., No. 13-08961, 2021 WL
4944085 (Bankr. D.P.R. Oct. 22, 2021). (We'll call it the "October
2021 Order.") After summarizing the arguments, the court concluded
"that the bottom-line of this case hinges on one factual issue."
Id. at *5. In its words, here was that one big issue:
Have the payments made by Instituto to
Oriental/Condado been credited and applied by
Oriental/Condado to the restructured allowed
secured claim in accordance with the
amortization provided for in the
[Plan] . . . which incorporates the
[S]tipulation with Oriental Bank (dkt. #491 in
bankruptcy case), approved on September 28,
2015 (dkt. #513 in the bankruptcy case)?
Id. It next explained that, to secure the declaratory judgment,
"Instituto ha[d] the burden of establishing" that payments "had
not been made" according to the schedule; its "conclusory
allegations" in the complaint didn't show any misapplication. Id.
- 11 -Still, Condado's retort -- that all payments had been correctly
applied in accordance with the Plan and the Stipulation -- wasn't
sufficient in the court's eyes to dismiss the case, because those
documents weren't before it. Id. So the bankruptcy court said
the issue could get figured out in three steps: first, determining
"how the payments should have been made and applied as set forth
in the [Plan]," then providing "a detail of the payments made,"
and finally providing "a detail of how the payments were applied
and the balance owed after each payment." Id. at *6. That all
made good sense.
And then things began to go off the rails. Without
expressly saying it was converting Condado's motion to dismiss
into a motion for summary judgment, the bankruptcy court then
ordered Instituto -- yes, Instituto, not Condado -- to move for
summary judgment. See id. But unlike the typical summary judgment
motion, the bankruptcy court said discovery wasn't necessary to
conduct this tripartite analysis because "such basic accounting
should have been in [Instituto's] possession before filing the
complaint, as it is the basis for the causes of action in the same.
Not having the evidence may raise the inference of intended delay
if the payments were not actually made."8 Id. at *5-6.
8 We pause here to note the effect of this ruling: Instituto
could no longer rely on the pleading standard, but instead had to
produce evidence to keep the case moving. As we'll discuss, we
think it awfully odd that the bankruptcy court imposed an
- 12 -ii. Instituto's Motion for Summary Judgment
Thus spawned more motions.
First, as the bankruptcy court directed, Instituto
indeed moved for summary judgment, and submitted with it a hefty
pile of papers. It argued that the Stipulation and the Plan
incorporated the 1991 Agreement, which in turn "created an
interest-bearing note for the then outstanding principal balance
on the loan and a non-interest-bearing Note for the then
outstanding overdue interest." With the motion came about 700
pages of documentation, including documents from the 1990s and
what we think is Oriental's spreadsheet of a payment schedule with
a "non[-]interest[-]bearing portion" in the exact amount Instituto
claimed: $3,585,388.53. Greengift (who had, by this point, taken
over for Condado) naturally opposed.9 It argued that all payments
had been applied as the Plan and the Stipulation required and
highlighted a spreadsheet of its own.
Instituto then said that it needed time to pursue
additional discovery to file its reply brief. In its view,
Greengift had argued that the documents were ambiguous, so
discerning the "intent of the [p]arties" was necessary for it to
evidentiary burden on Instituto without letting Instituto
undertake discovery, particularly given that Instituto repeatedly
claimed it couldn't meet that burden without such an opportunity.
9 And thus Greengift became the movant for the
still-outstanding motion to dismiss.
- 13 -respond to Greengift's arguments. Instituto thus sent a set of
interrogatories to Oriental (who, to remind, was the co-signatory
of the Stipulation). The bankruptcy court granted the extension
to pursue this discovery.
But Greengift moved to reconsider the decision on
January 13, 2022 (and yes, the specific dates begin to matter
here). It quoted the October 2021 Order, which (to remind) said
that the outstanding inquiry didn't "require conducting discovery
at this juncture." In re Instituto, 2021 WL 4944085, at *5. From
that, Greengift said that discovery wasn't needed for Instituto's
reply. A response from Instituto to this motion to reconsider was
due on January 27, 2022.
But that chance to respond never came. On January 21,
2022, the bankruptcy court held a long status conference. The
highlights are that the bankruptcy court (1) granted Greengift's
motion to reconsider and thus stayed any discovery until the
resolution of Instituto's summary judgment motion, and (2) ordered
the parties to provide supplements to their summary judgment
briefing within 21 days. It issued minutes of this status
conference and the order for supplemental briefing about a week
later, on January 27.
Instituto supplemented its briefing on February 11. It
filed more stacks of banking paperwork (largely provided by
- 14 -Oriental via its initial disclosures) that, in its view, showed
how the $3.5 million note "does not generate interest."
Greengift filed its brief six days later, but Instituto
suddenly moved to strike the filing. It argued that Greengift had
filed six days too late, because 21 days after the status
conference was February 11, rather than February 17. And Instituto
theorized that Greengift filed late so it could use this
no-longer-simultaneously-filed supplemental briefing to get a leg
up on Instituto.10 The bankruptcy court denied Instituto's motion
to strike without explanation.
At this point, we offer a quick reminder of the
procedural highlights thus far, all the better to understand the
upcoming order:
• Instituto filed an amended complaint.
• Condado moved to dismiss.
• Instituto sought to convert that motion into a motion
for summary judgment, and also sought discovery.
• Without resolving Condado's motion to dismiss, the
bankruptcy court ordered Instituto to file a motion for
summary judgment, but denied Instituto's request to get
discovery.
10On appeal, but not before the bankruptcy court, Greengift
pointed to the day the order was issued, rather than the day of
the status conference, as the day the 21-day clock began ticking,
which would make its supplemental brief timely.
- 15 -• Instituto sought discovery again.
• The bankruptcy court permitted it.
• Greengift moved for the court to reconsider that
decision.
• At the status conference, the bankruptcy court sided
with Greengift and again forbade discovery, but
permitted the parties to file supplemental briefing.
• Both parties filed supplemental briefing (though
quibbled about the timeline).
iii. The March 2022 Order
And, finally, we turn to the bankruptcy court's order
ending the case (which we now call the "March 2022 Order" to help
keep things straight). See generally In re Instituto, 2022 WL
609995. After describing much of the above, as well as providing
primers about Rule 12 and Rule 56 caselaw, the bankruptcy court
explained as follows:
Instituto has failed to present to the court
evidence or reasonable support for its
allegation that the [S]tipulation between
[Instituto] and [Oriental], as well as the
[Plan], provide that the portion of the credit
in the amount of $3,585,388.53 does not
generate interest. Moreover, even if the
$3,585,388.53 did not generate interest at
some point in time, Instituto has failed to
provide evidence that it has complied with the
payments as provided for in the [Plan] and the
[S]tipulation. Conclusory allegations do not
suffice. On the other hand, assuming the
truth of all well-plead facts in the amended
- 16 -complaint and giving the benefit of all
reasonable inferences therefrom, the court
concludes that the complaint does not plead a
plausible claim as it is based on conclusions
not supported by the facts. Plaintiff
Instituto has had a reasonable opportunity to
fill the factual gap and has been unable to do
so.
Id. at *7. With those five sentences, the litigation before the
bankruptcy court came to an end.
D. District Court Proceedings
Instituto appealed to the federal district court, per
the appellate bankruptcy process. It argued: (1) that the
bankruptcy court erred in dismissing the adversary proceeding;
(2) that it erred in denying Instituto's motion for summary
judgment; (3) that it erred in denying Instituto's request for
discovery; and (4) that it erred in denying Instituto's motion to
strike the supposedly late filing.
The district court found no error. See Instituto Médico
del Norte, Inc. v. Greengift Cap., LLC, No. CV 22-1122 (PAD), 2023
WL 2732420, at *1 (D.P.R. Feb. 24, 2023). For starters, it held
that the Plan didn't adopt the 1991 Agreement's bifurcation of the
notes. Instead, the Plan just stated that the loan's balance would
"be amortized in a 231-monthly term with interest at the annual
rate of 5.98%." Id. at *3. So the Plan didn't incorporate the
bifurcation terms, and the Stipulation's language (specifically
"with a[n] amortization as agreed in 1991") couldn't alone
- 17 -establish "that the parties were splitting the remaining balance
into one interest-bearing portion and a second
non-interest-bearing portion." Id.
Nor did the district court find reversible error in the
bankruptcy court's denial of Instituto's discovery requests. It
thought the issue could be resolved from the plain text of the
Plan, and it was unconvinced that the denial of discovery was
"plainly wrong" (the appellate standard of review, in its words).
Id. at *4.
Third, the district court affirmed what it determined to
be the bankruptcy court's decision to convert the motion to dismiss
into one for summary judgment, given the only factual question
necessary to resolve the case was outside the pleadings. Because
"the case was dismissed pursuant to the summary judgment standard,
not the traditional 12(b)(6) standard," this argument wasn't
getting Instituto anywhere. Id. at *5.
Finally, the district court said the bankruptcy court's
denial of the motion to strike Greengift's late filing was "a
purely discretional matter that this court will not interfere with
on appeal." Id.
Instituto then appealed to us. And here we are.
OUR TAKE
Instituto offers us essentially the same four arguments
it presented to the district court. Before we get to them, though,
- 18 -we note one thing: "While the district court affirmed the
bankruptcy court's decision, we review the bankruptcy court's
decision directly and cede no special deference to the district
court's determinations." In re Zizza, 875 F.3d 728, 731 (1st Cir.
2017) (cleaned up). So we draw on the district court's reasoning
only to the extent it helps us make sense of the bankruptcy court's
decision.
We begin with Greengift's motion to dismiss11, then move
to Instituto's motion for summary judgment, and close with thoughts
about discovery (not reaching the motion to strike).
A. Greengift's Motion to Dismiss
Instituto first argues that the bankruptcy court's order
violated Rule 12(b)(6) in a few ways. For one, Instituto says the
bankruptcy court's choice of words -- that it was granting
Greengift's motion to dismiss because Instituto's complaint was
"based on conclusions not supported by the facts" -- raised the
bar too high for the case to survive Rule 12(b)(6). In re
Instituto, 2022 WL 609995 at *7. As a follow-on, Instituto
observes that the bankruptcy court never explicitly converted
Greengift's motion to dismiss into a motion for summary judgment
(only denying Instituto's motion for summary judgment), where such
11To be clear, this is the motion to dismiss that Condado
originally filed. Greengift technically took it over when it
assumed Condado's place in the litigation. For simplicity's sake,
we refer to it as Greengift's motion to dismiss.
- 19 -a standard would have been permissible. And if all the
non-conclusory allegations were instead credited, says Instituto,
it properly stated claims for relief -- and thus the case shouldn't
have ended at the hands of Rule 12(b)(6).
Greengift responds that, once Instituto moved for
summary judgment (following the bankruptcy court's order), the
Rule 12(b)(6) standard "became inapplicable," because Greengift's
motion to dismiss was converted into a motion for summary
judgment.12 And, relying on the district court's formulation
(which strikes us as somewhat baffling), Greengift explains that
the motion was "expressly converted." Instituto, 2023 WL 2732420,
at *5. On the merits, Greengift walks through why Instituto failed
to state a claim, quoting the bankruptcy court in saying that
Instituto "failed to provide evidence" that there's a part of the
loan that doesn't accrue interest and that Instituto "has complied
We find the argument admittedly a bit confusing, so we're
12
going to quote the brief verbatim here:
Instituto repeats in the instant appeal that
the Bankruptcy Court erred in dismissing its
Complaint because it "should have applied the
standards under Rule 12(b)(6), but failed to
do so." . . . Instituto fails to understand
that when it moved for summary judgment, the
Fed. R. Civ. P. 12(b)(6) standard became
inapplicable. As correctly analyzed by the
District Court, "the 12(b)(6) standard
discussion is inapposite because the
Bankruptcy Court expressly converted
Greengift's motion to dismiss into a motion
for summary judgment."
- 20 -with" the Plan and the Stipulation. See In re Instituto, 2022 WL
609995, at *7.
For starters, we offer just a bit about when, exactly,
motions to dismiss are converted into motions for summary judgment,
an analysis that's "functional rather than mechanical."
Calderón-Amezquita v. Rivera-Cruz, 158 F.4th 54, 69 (1st Cir.
2025). "Under Rule 12(b)(6), the district court may properly
consider only facts and documents that are part of or incorporated
into the complaint; if matters outside the pleadings are
considered, the motion must be decided under the more stringent
standards applicable to a Rule 56 motion for summary judgment."
Trans-Spec Truck Serv., Inc. v. Caterpillar Inc., 524 F.3d 315,
321 (1st Cir. 2008) (emphasis added, cleaned up); see also Crawford
v. Salve Regina Univ., 178 F.4th 734, 742-43 (1st Cir. 2026)
(discussing the rule). But the important word there is
"considered." Because, "if the district court chooses to ignore
the supplementary materials and determines the motion under the
Rule 12(b)(6) standard, no conversion occurs." Garita Hotel Ltd.
P'ship v. Ponce Fed. Bank, F.S.B., 958 F.2d 15, 18 (1st Cir. 1992).
Put differently, "the test is not whether supplementary materials
were filed, but whether the court actually took cognizance of them,
or invoked Rule 56, in arriving at its decision." Id. at 19.
After careful review of the record and the parties'
arguments, we are puzzled by the bankruptcy court's treatment of
- 21 -Greengift's motion to dismiss. "And, regrettably, the record does
not supply a ready answer: each side's characterization of the
judge's actions finds at least some support there."
Rivera-Carrasquillo, 812 F.3d at 228.
Here's what Greengift gets right. Earlier in the
litigation, the bankruptcy court recognized that a factual issue
was central to the adjudication of the ultimate case. See In re
Instituto, 2021 WL 4944085, at *5 ("The above factual question is
the key to the amended complaint."). And the same order also said
that the circumstances "move[] the court to consider the matter
through a motion for summary judgment as it is fact-based, and the
dispositive data is not before the court." Id. at *6. Those
points certainly favor Greengift's interpretation of the
record -- at least an implicit conversion of the motion into one
for summary judgment.
Along with that, the bankruptcy court said as follows
during the January 2022 status conference:
[T]he motion to dismiss . . . was addressed in
this court's order of October 22,
2021 . . . in which the Court opted to
consider the motion to dismiss as a motion for
summary judgment and that, in answer to this
Court's order . . . is that the
debtor-plaintiff filed a motion for summary
judgment. So really, what is before the Court
is a motion for summary judgment and the
opposition by Greengift.
- 22 -And the bankruptcy court, almost immediately afterwards, agreed
that Greengift's motion to dismiss was "subsumed" (whatever that
means) by Instituto's motion for summary judgment.
Still, countervailing considerations suggest that
Instituto's right: the bankruptcy court applied the wrong standard
in the dispositive order. For starters, before the issuance of
the October 2021 order, Instituto specifically asked for the motion
to dismiss (which, to remind, was at that point filed by Condado,
because Greengift hadn't taken over) to be converted into a motion
for summary judgment, and Condado opposed -- actually saying that
the motion to dismiss shouldn't be converted into a motion for
summary judgment.
Several parts of the March 2022 order also complicate
things. For starters, the bankruptcy court provided more than a
page's worth of generic Rule 12(b)(6) caselaw in the "standard"
sections -- with a specific section of "Standard of Motion to
Dismiss" -- and nowhere in that lengthy explanation did it include
any caselaw about conversion. See In re Instituto, 2022 WL 609995,
at *3-4. We find the extended discussion of Rule 12(b)(6) caselaw
an odd addition if such a conversion to summary judgment did occur.
The one paragraph of analysis that the bankruptcy court
provided in that order did include statements that don't quite
comport with Rule 12(b)(6). On the one hand, the bankruptcy court
said that it "assum[ed] the truth of all well-plead facts in the
- 23 -amended complaint and [gave] the benefit of all reasonable
inferences therefrom." Id. at *7. So far, so good.
But the bankruptcy court then faulted Instituto for
failing to state a claim because the complaint "does not plead a
plausible claim as it is based on conclusions not supported by the
facts." Id. Perhaps that was a statement that the complaint was
too conclusory -- which also is fine to say when evaluating a Rule
12(b)(6) motion. Yet the bankruptcy court then noted that
Instituto "had a reasonable opportunity to fill the factual gap
and has been unable to do so." Id. We don't read the bankruptcy
court to be saying that Instituto could've filled this gap via a
second amended complaint (and no party is arguing that's what the
bankruptcy court meant), so the fault assigned to Instituto in
that sentence seems to be about a dearth of evidence. Assuming
the truth of well-plead facts in the complaint is in-line with
Rule 12(b)(6); granting a motion to dismiss in part because a party
didn't "fill a factual gap" with evidence, however, is not. See
e.g., In re Maifeld, 495 B.R. 127, 134 (Bankr. D. Mass. 2013),
aff'd sub nom. Maifeld v. W. Coast Life Ins., 516 B.R. 186 (D.
Mass. 2014) (explaining "that a Rule 12(b)(6) motion to dismiss
does not permit the Court to engage in fact finding or otherwise
test the evidence," but rather "to test the sufficiency of the
allegations"). But in back-to-back sentences, the bankruptcy
court seemed to suggest both bore on the analysis. That is wrong.
- 24 -And anyways, we think all the order's language about Rule 12(b)(6)
is awfully odd given the bankruptcy court's early statements about
the motion to dismiss being "subsumed," too.
In the appellate posture, the district court did an
admirable job trying to make sense of all this. Yet we can't agree
with its analysis. First, it said the bankruptcy court "expressly
converted Greengift's motion to dismiss into a motion for summary
judgment." Instituto, 2023 WL 2732420, at *5. But that overstates
the record's clarity: the bankruptcy court ordered Instituto to
move for summary judgment, while not stating what it did with
Greengift's motion to dismiss -- at least before the final order,
where the bankruptcy court granted the motion at least in part
using Rule 12(b)(6) language, which would contradict the district
court's conclusion that the motion was converted. See In re
Instituto, 2022 WL 609995, at *7. And that's also why we can't
buy the district court's observation that the case was "dismissed
pursuant to the summary judgment standard, not the traditional
12(b)(6) standard." Instituto, 2023 WL 2732420, at *5. That
doesn't match up with the actual language of the bankruptcy court's
order. See In re Instituto, 2022 WL 609995, at *3-4; id. at *7.
So here's where we are confused. Did the bankruptcy
court think it was converting Greengift's motion to dismiss into
a motion for summary judgment when it ordered Instituto to file a
motion for summary judgment? The difference matters for a couple
- 25 -reasons. For one, the burden: at summary judgment, if the moving
party shows there is "no genuine factual issue for trial, the
non-moving party must come armed with some evidence to show that
a reasonable jury could find for them." Guldseth v. Fam. Med.
Assocs. LLC, 45 F.4th 526, 533-34 (1st Cir. 2022). For another,
the way we read the record at summary judgment: we draw "all
reasonable inferences" in favor of the non-moving party. Xiaoyan
Tang v. Citizens Bank, N.A., 821 F.3d 206, 215 (1st Cir. 2016).
Swap out the moving party and these concepts all go the other way,
too: Instituto could no longer rely on its pleadings but now had
the "evidentiary obligations" to "put up or shut up" at summary
judgment, even though it wasn't permitted to get discovery. See
United States ex rel. Omni Healthcare Inc. v. MD Spine Sols. LLC,
160 F.4th 248, 265 (1st Cir. 2025).
And by tying Greengift's motion to dismiss with
Instituto's motion for summary judgment, and then still using the
traditional language of Rule 12(b)(6) to rule against Instituto,
the bankruptcy court made it difficult to tell what burdens and
standards it actually did apply. And, importantly, "[c]oming down
either way would require us to emphasize and rely on some of the
judge's words, while ignoring and putting to one side others.
Guessing at what a [bankruptcy] judge intended to do does not
strike us as the proper way to go about deciding an appeal."
Rivera-Carrasquillo, 812 F.3d at 230. "Because the record on
- 26 -appeal can be fairly read to support each party's divergent view"
of this important motion, "an explanation from the [bankruptcy]
court is more than valuable, it is essential for us to conduct a
meaningful appellate review." Id. (cleaned up).
So we vacate the bankruptcy court's order dismissing
Instituto's complaint (as well as the district court's affirmance
of that order) so that the bankruptcy court can take another shot
at this one. As we've explained in great detail, some parts of
the current record suggest the bankruptcy court treated it as a
motion to dismiss, yet others evince it was treated as a motion
for summary judgment, and we will not guess between the two. We
trust that, in addressing the motion a second time, the bankruptcy
court will be clearer about the standard it is applying -- Rule
12(b)(6) or Rule 56 -- as well as the materials it "actually took
cognizance of" in deciding the motion.13 Garita Hotel Ltd. P'ship,
958 F.2d at 19.
13 To be clear: if, in resolving either party's motion, the
court takes cognizance of anything beyond the pleadings (or
anything properly incorporated into the pleadings), it should
convert Greengift's motion into one for summary judgment,
consistent with our caselaw. See Crawford, 178 F.4th at 742-43;
cf. Brown v. P.S. & Sons Painting, Inc., 680 F.2d 1111, 1112 n.1
(5th Cir. 1982) ("Although the District Court, in granting the
motion of the individual defendants, referred to this motion as
one to dismiss for failure to state a claim . . . it seems likely
that the District Court, in passing on both motions, considered
the depositions and other documents that had been filed, including
both parties' memoranda on the motions.").
- 27 -But importantly, the bankruptcy court should not feel
bound to simply clarify its past decision. Instead, it is welcome
to reconsider the propriety of that decision on the merits, given
the guidance we are about to provide based on its adjudication of
Instituto's motion for summary judgment (and, specifically, the
Stipulation's potential ambiguity). In other words, "we leave the
procedure to be followed on remand to the lower court's informed
discretion, without endeavoring to set an outer limit on its range
of options," aside from the minimum requirement of making it
abundantly clear which standard it uses in deciding Greengift's
motion. See Uno v. City of Holyoke, 72 F.3d 973, 992 (1st Cir.
1995) (cleaned up).
B. Instituto's Motion for Summary Judgment
We now turn to the bankruptcy court's treatment of
Instituto's motion for summary judgment.
As best we can tell, we read the bankruptcy court to
have denied Instituto's motion for two reasons: because
(1) Instituto "failed to present" evidence or support that the
$3.5 million note doesn't accrue interest and (2) even if the note
didn't accrue interest "at some point in time," Instituto still
didn't offer up proof "that it has complied with the payments as
provided for in the [Plan] and the [S]tipulation." In re
Instituto, 2022 WL 609995, at *7. Instituto attacks each of these
holdings on appeal.
- 28 -But, like the bankruptcy court's handling of the motion
to dismiss, we find that its terse discussion of the issues raised
by Instituto's motion for summary judgment does not provide us
adequate material for appellate review. We have trouble
understanding its holdings, each of which could be interpreted at
least a couple ways and lack citation to applicable law. (We'll
lay out why shortly.) So we will vacate and remand the denial of
summary judgment for Instituto, as well. But, since we're already
here, we will provide some guidance that we hope will be helpful
to the bankruptcy court moving forward.
i. Interest
Instituto first says that, from the "plain language of
the Stipulation and the Plan," the $3.5 million note doesn't accrue
interest even after the Plan's confirmation. The hook that
Instituto uses is the "[a]n amortization as agreed in 1991"
language from the Stipulation: that (in its view) clearly
incorporates the bifurcated note plan. And even if that language
isn't clear, says Instituto, the parties' actions during and after
negotiation in 2015 prove that the two-note track survived the
Plan's confirmation. In Instituto's view, it has documentation
from Oriental (who, remember, signed the Stipulation with
Instituto) showing that the non-interest-bearing note was treated
differently even after the Plan's confirmation. That includes the
"Workout Plan Proposal" showing, by name, the separate
- 29 -interest-bearing note for $3.5 million. Yet Instituto says the
bankruptcy court and the district court totally ignored this
evidence.
Greengift responds that neither the Stipulation nor the
Plan help Instituto. In Greengift's view, a "1991 Agreement" that
helps Instituto "does not exist," at least in the sense that
Instituto has failed to specifically identify where it found
support for its argument about the bifurcated note plan. Greengift
also says (citing some caselaw) that anyway, "under a confirmed
reorganization plan[,] former legal relationships between a debtor
and its creditors are extinguished and replaced by new commitments
binding in law," the point being that the Plan supplanted any
remnants of the 1991 Agreement's purported bifurcated-note plan.
See In re DiBerto, 171 B.R. 461, 471 (Bankr. D.N.H. 1994) (cleaned
up). And as for the "Workout Plan Proposal," Greengift says that
it was neither attached, nor referenced, nor incorporated into the
Plan, so it can't count.
Here, too, the bankruptcy court's decision unfortunately
does not provide sufficient rationale for us to try and review.
Cf. Grossman, 241 F.3d at 67-69. To refresh, all the bankruptcy
court had to say on the matter was this: "Instituto has failed to
present to the court evidence or reasonable support for its
allegation that the [S]tipulation between [Instituto] and
[Oriental], as well as the [Plan], provide that the portion of the
- 30 -credit in the amount of $3,585,388.53 does not generate interest."
In re Instituto, 2022 WL 609995, at *7. But this
sentence -- arguably the million-dollar (or, really,
$3.5-million-dollar) sentence -- could reasonably mean at least
two different things:
1. That the bankruptcy court thought the Stipulation's
phrase "[a]n amortization as agreed in 1991" was clear
that the Plan did not incorporate the bifurcated note
approach that Instituto says it does; or
2. That the bankruptcy court thought the Stipulation's
phrase "[a]n amortization as agreed in 1991" was
ambiguous, and thus the parties' intent in the
Stipulation was relevant, but Instituto's proffered
evidence didn't prove the parties intended to do the
bifurcated note approach.
Between the two, the bankruptcy court didn't quite say which it
thought was right (or if a third possibility existed). See In re
Instituto, 2022 WL 609995, at *7. But our review would look quite
different depending on the holding. We might be reviewing a simple
(in relative terms) exercise of contract interpretation, which
could be affirmed, reversed, or vacated with instructions to
evaluate extrinsic evidence of intent. Or we might be reviewing
an archeological dig into the record to evaluate extrinsic evidence
of intent, which could be affirmed, reversed, or vacated with
- 31 -instructions to proceed to trial based on the existence of a
material dispute of fact. But we don't know which it is.
Given what we're about to describe, we think it would be
reasonable to say that the phrase was ambiguous, so an exploration
into intent is necessary.14 And to the extent the bankruptcy court
thought otherwise, we think it should take another careful look.
We want to remind the bankruptcy court of the law that
should guide its analysis. For starters, we treat these bankruptcy
documents -- a confirmation plan and a stipulation -- like
contracts. In re New Seabury Co. Ltd. P'ship, 450 F.3d 24, 33
(1st Cir. 2006). So to figure out what they mean, we use
"principles of contract interpretation." Id. Such principles are
ordinarily derived from state law. See, e.g., DIRECTV, Inc. v.
Imburgia, 577 U.S. 47, 54 (2015) (explaining that "the
interpretation of a contract is ordinarily a matter of state law").
That's true even in federal bankruptcy cases. See In re Felt Mfg.
Co., 402 B.R. 502, 511 (Bankr. D.N.H. 2009); In re BLB Worldwide
Holdings, Inc., No. 09-12420, 2015 WL 13829131, at *10 (Bankr.
D.R.I. Nov. 3, 2015). So that's why we are about to draw from
Puerto Rico's contract law.
14 We say this not to bind the bankruptcy court to this
reasoning for law-of-the-case purposes, but rather to provide at
least some meaningful appellate guidance that it can draw on in
its reconsideration, since we're already here.
- 32 -Under Puerto Rico's Civil Code,15 two principles are
especially important to contract interpretation:
If the terms of a contract are clear and leave
no doubt as to the intentions of the
contracting parties, the literal sense of its
stipulations shall be observed.
If the words should appear contrary to the
evident intention of the contracting parties,
the intention shall prevail.
P.R. Laws Ann. tit. 31, § 3471; see also Wells Real Est. Inv. Tr.
II, Inc. v. Chardon/Hato Rey P'ship, S.E., 615 F.3d 45, 53 (1st
Cir. 2010). And, drawing on Puerto Rican jurisprudence, we've
explained that clear terms "are those that in themselves are lucid
enough to be understood in one sense alone, without leaving any
room for doubt, controversies, or difference of interpretation."
Home Ins. Co. v. Pan Am. Grain Mfg. Co., 397 F.3d 12, 16 (1st Cir.
2005) (quoting Heirs of Ramírez de Arellano v. Superior Court, 81
P.R.R. 347, 351 (1959)) (cleaned up). Likewise, we must take a
holistic look at the agreement: a contract's terms "should be
interpreted in relation to one another, giving to those that are
15 We recognize that the Puerto Rico Civil Code was amended
in 2020 and the new version took effect on November 28, 2020. But
given that the Stipulation and the Plan were formed before the new
Civil Code's effective date, we refer to the applicable provisions
of the Puerto Rico Civil Code of 1930, which we understand to be
the applicable law at the time of the alleged facts. See Disaster
Sols., LLC v. City of Santa Isabel, 21 F.4th 1, 6 (1st Cir. 2021)
("Because the alleged contract was formed prior to the effective
date of the new Civil Code, we apply, as the parties have, Puerto
Rico law as it was under the 1930 Civil Code.").
- 33 -doubtful the meaning which may appear from the consideration of
all of them together." P.R. Laws Ann. tit. 31, § 3475.
If the terms of the agreement (which are, in theory, the
best evidence of intent) are ambiguous, the court can look to
"extrinsic evidence" to "prove the parties' intent." Wells Real
Est., 615 F.3d at 54. Importantly, "summary judgment is
appropriate only if the undisputed extrinsic evidence of intent
supports only one of the conflicting interpretations." Id.
(cleaned up). We also note the mechanics of summary judgment:
because Instituto was the party seeking summary judgment, it needed
to "inform the court of the basis for its motion and identify the
portions of the pleadings, depositions, answers to
interrogatories, admissions, and affidavits, if any, that
demonstrate the absence of any genuine issue of material fact."
Omni Healthcare, 160 F.4th at 258 (cleaned up). But as long as
Instituto crosses "this modest threshold," it becomes Greengift's
"duty to, with respect to each issue on which it would bear the
burden of proof at trial, demonstrate that a trier of fact could
reasonably resolve that issue in its favor." Id. (cleaned up).
With all those principles in mind, we'll turn back to
the documents and offer just a bit of guidance. When the Plan and
the Stipulation are read together -- as they should be, given the
Plan's incorporation of the Stipulation -- there's a fair case to
be made that they are contradictory and thus ambiguous. (Note,
- 34 -importantly, that we aren't holding this as a matter of law, but
rather offering an impression in order to help move the case along
with additional appellate guidance.)
Start with the Plan's text. In the "Classes of Claims
and Equity Interest" section, it says: "A settlement agreement was
reached with Oriental as to the manner in which this creditor will
be paid." (Underlining removed.) As far as we can tell, that
"settlement agreement" is the Stipulation. Next sentence: "The
settlement was approved by this Hon. Court and its terms and
conditions are made part of the treatment for this creditor under
the Plan." (Underlining removed.) So the Stipulation is built
into the Plan, for sure.
Now, onto the Stipulation. It says:
This Plan proposes to restructure the balance
of the allowed secured claim to be amortized
in a 19.25 year term with interest at the
annual rate of 5.98% with a monthly payment of
$60,000 for a six (6) month[] period from the
effective date of the [P]lan; thereafter a
monthly payment of $75,069.00 for a period of
fifty four (54) months with a[n] amortization
as agreed in 1991.
(Emphasis added.) So, cutting through the fat, one may well read
the Stipulation to say the Plan "proposes to restructure" the
arrangement "with a[n] amortization as agreed in 1991."
True, as the district court noted, the "Treatment of
Claims" section in the Plan "makes no distinction as to
interest-bearing and non-interesting-bearing portions of the
- 35 -debt," instead saying simply "that the totality of the balance of
the allowed secured claim will 'be amortized in a 231-monthly term
with interest at the annual rate of 5.98%.'" Instituto, 2023 WL
2732420, at *3-4. But we think that only highlights a possible
internal contradiction within the Plan. One section says the
Stipulation governs, and the Stipulation says the amortization to
be followed was "agreed in 1991," while another section says that
it's a straightforward amortization "in a 231-monthly term with
interest at the annual rate of 5.98%," without reference to the
two-note plan. Maybe those terms can be read together to say the
same thing; but maybe (as Instituto suggests) the "amortization as
agreed in 1991" is indeed the two-track plan. And that possible
contradiction -- as well as whether the two-note plan constitutes
an "amortization" more generally -- is what might make the Plan
ambiguous. Cf. J.R.T. v. Nat'l Packing Co., 112 D.P.R. 162, 12
P.R. Off. Trans. 197, 202 (P.R. 1982) ("A clause whose language
seems clear may be ambiguous if it allows conflicting
interpretations.").
To reach the contrary conclusion, the district court
made a couple other points that we briefly address. See Instituto,
2023 WL 2732420, at *3-4. First, it said that the Plan didn't
"expressly incorporate" the terms of the 1991 Agreement. Id. at
*4. But that overlooks how the Plan incorporates the Stipulation,
which does incorporate (at least to some extent) the "amortization
- 36 -as agreed in 1991." Second, it said that the only reference to
the 1991 Agreement in the Stipulation was "to describe how the
claim was being paid prior to its confirmation." Id. But, as
we've detailed, the Stipulation itself references the
"amortization as agreed in 1991" in part to explain how the Plan
"proposes to restructure" the loan going forward.
The bankruptcy court, on remand, should make a more
specific determination about Instituto and Oriental's intent in
crafting the Stipulation in 2015 to determine what, exactly, they
meant by "[a]n amortization as agreed in 1991." We are confident
that, in resolving the summary judgment motion(s), the bankruptcy
court will enlighten the parties and any reviewing courts about
its specific reasoning. And we remind the bankruptcy court that
"summary judgment is appropriate only if the undisputed extrinsic
evidence of intent supports only one of the conflicting
interpretations." Wells Real Est., 615 F.3d at 54 (cleaned up).
We trust it will proceed to trial should there be sufficient
ambiguity about the parties' intent.
ii. Compliance
Recall the alternative grounds for the bankruptcy
court's decision to deny Instituto summary judgment: even if one
part of the note didn't accrue interest "at some point in time,"
Instituto still didn't offer up proof "that it has complied with
- 37 -the payments as provided for in the [Plan] and the [S]tipulation."
In re Instituto, 2022 WL 609995, at *7.
Greengift says that this means the bankruptcy court
found Instituto to be in default under the Plan. And, according
to Greengift, that means that Instituto cannot enforce the Plan,
because 11 U.S.C. § 524(i) says that "the willful failure of a
creditor to credit payments received under a plan . . . shall
constitute a violation" of said plan "unless . . . the plan is in
default." In other words, based upon its reading of § 524(i),
because Instituto is in default under the Plan, it cannot advance
a civil contempt claim against Greengift invoking the Plan.
Instituto, in its reply brief, seems to contest that it's in
default.
This is another determination that we can't make sense
of, based on the complexity of the record, the dearth of caselaw
on 11 U.S.C. § 524(i) (which, to be clear, is a statute that the
bankruptcy court didn't cite in its order), and the paucity of the
bankruptcy court's reasoning about whether it was making a finding
of default. Again, we won't leave a potentially decisive holding
on these grounds up to guesswork. See In re Farnsworth, No. BAP
MW 08-086, 2009 WL 8466786, at *8 (B.A.P. 1st Cir. Nov. 20, 2009)
("Effective review should not depend upon the intuition of the
appellate judges or their ability to divine the critical facts or
the [bankruptcy] court's reasons for its judgment.").
- 38 -So we vacate and remand this holding, too. In addressing
the issue again, the bankruptcy court should clarify what it meant
by its statement concerning compliance with the payment schedule
required by the Plan and the Stipulation, as well as (1) whether
the bankruptcy court thought the statement was dispositive for
both of Instituto's claims and (2) whether the bankruptcy court
was (as Greengift says it is) making a finding under 11 U.S.C.
§ 524(i) that Instituto was in default and thus cannot enforce the
Plan.
C. Discovery
Instituto next takes aim at the bankruptcy court's
granting of summary judgment despite its denial of discovery, a
decision which we would ordinarily review under the abuse of
discretion standard. See, e.g., In re Colon, No. PR 07-053, 2008
WL 8664760, at *3 (B.A.P. 1st Cir. Nov. 21, 2008). Because we
have vacated the decision denying Instituto summary judgment, we
need not linger on this issue, but we note one thing.
Remember the bankruptcy court asserted that the key
question to this case could be resolved through the summary
judgment framework, yet without discovery. See In re Instituto,
2021 WL 4944085, at *5 ("The answer to the question does not
require conducting discovery at this juncture."). We remind the
bankruptcy court that our caselaw strongly disfavors granting
summary judgment against a party without giving that party the
- 39 -opportunity for discovery, particularly when the party has sought
discovery (as Instituto has here, repeatedly). See, e.g.,
Cortés-Ramos v. Martin-Morales, 178 F.4th 760, 773 (1st Cir. 2026)
(collecting cases). So while the bankruptcy court of course
retains broad discretion over discovery, it remains obligated to
"fairly balance the interests of the parties." Id. at 775. It
should keep in mind that obligation going forward.
THE WRAP-UP
In short, we vacate the appealed order and remand to the
district court with instructions that the matter be remanded to
the bankruptcy court for further proceedings consistent with this
opinion.16 See Grossman, 241 F.3d at 69.
Unlike a more usual "vacate and remand for
clarification" case, we do not retain jurisdiction here because of
the many ways the litigation could unfold, and we see no need to
restrict the bankruptcy court further in figuring things out.
All parties will bear their own costs.
And that's all, folks.
16 We decline to reach Instituto's argument about the
bankruptcy court's supposed improper consideration of Greengift's
supplementary brief, given that we are vacating the decision
already.
- 40 -