Doral Financial Corporation filed papers Wednesday appealing a decision by the Superior Court and asking the Puerto Rico Supreme Court to assume jurisdiction of the appeal.
“The Treasury Department’s unilateral decision to nullify its binding agreement with Doral has already caused enormous harm to Doral, and the possibility that Doral could be forced to defend that agreement in the Treasury Department’s own administrative process risks even further harm,” said Doral’s counsel Matthew McGill, a partner with Gibson, Dunn & Crutcher.
“Doral is entitled to a court hearing to determine the validity of the agreement, not biased review by the very entity that declared the agreement ‘null.’ We are hopeful that the Supreme Court will promptly correct the Court of First Instance’s errors so that this dispute can be brought to a prompt conclusion and the ‘binding and final’ agreement upheld,” McGill added.
On Monday, the Court of First Instance issued an opinion concluding that Treasury had improperly attempted to invalidate a binding tax agreement with Doral. According to the court, the agency did not identify a proper legal basis for invalidating the agreement.
Despite this conclusion, however, the Superior Court gave the agency another opportunity to decide whether the agreement is binding. If Treasury decides the agreement is not binding, under the decision by the Superior Court, Doral must litigate that dispute through Treasury’s own administrative process.
On March 26, 2012, Doral entered into an agreement with Treasury, in which the parties agreed to treat Doral’s right to claim approximately $766 million in deductions over the next eleven years as equivalent to a tax overpayment of $229 million.
By its terms, the agreement was “final and conclusive,” and could “not be reopened, annulled, modified, set aside or disregarded” unless specific conditions were met, Doral claims.
However, last month, Treasury announced it had declared the agreement “null.”
Doral has previously expressed concern over potential retaliation by state agencies for pursuing its rights to enforce the 2012 agreement.