The saga between Doral Financial Corp. and the Puerto Rico Treasury Department that began earlier this summer took another turn recently, when a local court ordered the parties to sit down and negotiate an agreement that would grant the bank a $229 million tax refund.
Doral filed a lawsuit against the government agency — as well as Treasury Secretary Melba Acosta — in June asking the court to enforce the so-called Closing Agreement dated March 26, 2012 through which Treasury reportedly agreed to refund the bank for the amount representing overpaid taxes.
Since the filing, there have been a number of decisions. Most recently, on July 29, 2014 the court set an expedited schedule for discovery to occur from July 30 to August 8, 2014, and set the pre-trial hearing for August 11, 2014 and the evidentiary hearing for August 12 and 13, 2014.
The Court of First Instance also ruled that the Commonwealth will have the burden of establishing any alleged misrepresentation of a material fact by Doral with clear and convincing proof — the justification Treasury has been offering to support its decision to nullify the refund.
Now, Doral and Treasury have entered into court-supervised negotiations to settle all claims by Doral, and have agreed to suspend the Aug. 8 hearings.
The parties have 10 business days as of last Friday to finalize the terms of a settlement agreement. Although there is a proposed settlement framework, the final agreement is still being negotiated by the parties and remains subject to the court’s approval.