United States Court of Appeals

For the First Circuit

No. 22-1048

IN RE: THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO

RICO, AS REPRESENTATIVE FOR THE COMMONWEALTH OF PUERTO RICO; THE
FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS
REPRESENTATIVE FOR THE PUERTO RICO SALES TAX FINANCING
CORPORATION, a/k/a Cofina; THE FINANCIAL OVERSIGHT AND
MANAGEMENT BOARD FOR PUERTO RICO, AS REPRESENTATIVE FOR THE
EMPLOYEES RETIREMENT SYSTEM OF THE GOVERNMENT OF THE
COMMONWEALTH OF PUERTO RICO; THE FINANCIAL OVERSIGHT AND
MANAGEMENT BOARD FOR PUERTO RICO, AS REPRESENTATIVE FOR THE
PUERTO RICO HIGHWAYS AND TRANSPORTATION AUTHORITY; THE FINANCIAL
OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS
REPRESENTATIVE FOR THE PUERTO RICO ELECTRIC POWER AUTHORITY
(PREPA); THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO
RICO, AS REPRESENTATIVE OF THE PUERTO RICO PUBLIC BUILDINGS
AUTHORITY,

Debtors,
________________________________________

COOPERATIVA DE AHORRO Y CREDITO ABRAHAM ROSA; COOPERATIVA DE

AHORRO Y CREDITO DE CIALES; COOPERATIVA DE AHORRO Y CREDITO DE
JUANA DIAZ; COOPERATIVA DE AHORRO Y CREDITO DE RINCON;
COOPERATIVA DE AHORRO Y CREDITO DE VEGA ALTA; COOPERATIVA DE
AHORRO Y CREDITO DR. MANUEL ZENO GANDIA,

Plaintiffs, Appellants,

COOPERATIVA DE AHORRO Y CREDITO DE LARES Y REGION CENTRAL,

Plaintiff,

v.

THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS

REPRESENTATIVE FOR THE COMMONWEALTH OF PUERTO RICO; THE
FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS
REPRESENTATIVE FOR THE PUERTO RICO SALES TAX FINANCING
CORPORATION, a/k/a Cofina; THE FINANCIAL OVERSIGHT AND
MANAGEMENT BOARD FOR PUERTO RICO, AS REPRESENTATIVE FOR THE
 EMPLOYEES' RETIREMENT SYSTEM OF THE GOVERNMENT OF THE
COMMONWEALTH OF PUERTO RICO; THE FINANCIAL OVERSIGHT AND
MANAGEMENT BOARD FOR PUERTO RICO, AS REPRESENTATIVE FOR THE
PUERTO RICO HIGHWAYS AND TRANSPORTATION AUTHORITY; THE FINANCIAL
OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS
REPRESENTATIVE FOR THE PUERTO RICO ELECTRIC POWER AUTHORITY
(PREPA); THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO
RICO, AS REPRESENTATIVE OF THE PUERTO RICO PUBLIC BUILDINGS
AUTHORITY; THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR
PUERTO RICO; CORPORACIÓN PÚBLICA PARA LA SUPERVISIÓN Y SEGURO DE
COOPERATIVAS DE PUERTO RICO; GOVERNMENT DEVELOPMENT BANK OF
PUERTO RICO; GDB DEBT RECOVERY AUTHORITY; JORGE L. PADILLA,
Nominal Defendant; MATTHEW KARP, Nominal Defendant; DAVID
PAUKER, Nominal Defendant; GDB PUBLIC ENTITY TRUST; PUERTO RICO
FISCAL AGENCY AND FINANCIAL ADVISORY AUTHORITY; JOSE B. CARRION,
III; ANDREW G. BIGGS; ARTHUR J. GONZALEZ; CARLOS M. GARCIA; JOSE
R. GONZALEZ; ANA J. MATOSANTOS; DAVID A. SKEEL, JR.; ELI DIAZ
ATIENZA; SECURITIES FIRMS A-Z; LAW FIRMS AND COUNSEL; ACCOUNTING
AND/OR AUDITING FIRMS; INSURANCE COMPANIES A-Z,

Defendants, Appellees,

CHRISTIAN SOBRINO,

Defendant.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Laura Taylor Swain,* U.S. District Judge]

Before

Kayatta, Howard, and Thompson,

Circuit Judges.

Guillermo J. Ramos-Luiña for appellants.

Arthur Steinberg, with whom Scott I. Davidson, King & Spalding

LLP, Ileana M. Oliver-Falero, Charles E. Vilaró-Valderrábano, and

* Of the Southern District of New York, sitting by

designation.
Cancio Covas & Santiago, LLP were on brief, for appellees the GDB
Debt Recovery Authority, Jorge L. Padilla, Matthew Karp, and David
Pauker.

Juan Carlos Deliz, with whom DBPR Legal, LLC was on brief,
for appellee Corporación Pública para la Supervision y Seguro de
Cooperativas de Puerto Rico.

John E. Roberts, with whom Timothy W. Mungovan, Adam L.

Deming, Martin J. Bienenstock, Mark D. Harris, Jonathan E. Richman,
Julia D. Alonzo, Shiloh A. Rainwater, and Proskauer Rose LLP were
on brief, for appellee the Financial Oversight and Management Board
for Puerto Rico, for itself and as representative of the debtors,
and the Board's individual members.

Luis C. Marini-Biaggi, Carolina Velaz Rivero, Ignacio J.

Labarca-Morales, and Marini Pietrantoni Muñiz LLC for appellees
the Puerto Rico Fiscal Agency and Financial Advisory Authority and
the Government Development Bank of Puerto Rico.

November 23, 2022

 THOMPSON, Circuit Judge. In this adversary proceeding,1

six Credit Unions2 claim the Commonwealth of Puerto Rico and

several of its agencies and instrumentalities3 induced and forced

them to invest in worthless government-issued securities.

According to the Credit Unions, the defendants knew -- but did not

disclose -- that these would be losing investments given the

precarious and dire financial situation in which Puerto Rico found

itself at the time. As part of the broader proceedings underway

to restructure the Commonwealth's debts pursuant to Title III of

"[A]n adversary proceeding is a subsidiary lawsuit within

1

the larger framework of a bankruptcy case." In re Fin. Oversight

& Mgmt. Bd. for P.R., 872 F.3d 57, 63 (1st Cir. 2017) (alteration
in original) (quoting Kowal v. Malkemus (In re Thompson), 965 F.2d
1136, 1140 (1st Cir. 1992)); see also Fed. R. Bankr. P. 7001 (which
48 U.S.C. § 2170 says shall apply to PROMESA cases).

The plaintiffs include Cooperativa de Ahorro y Crédito

2

Abraham Rosa, Cooperativa de Ahorro y Crédito de Ciales,

Cooperativa de Ahorro y Crédito de Juana Díaz, Cooperativa de
Ahorro y Crédito de Rincón, Cooperativa de Ahorro y Crédito Vega
Alta, and Cooperativa de Ahorro y Crédito Dr. Manual Zeno Gandia.

The agencies and instrumentalities named as defendants

3

include the Corporación Pública para la Supervisión y Seguro de

Cooperativas de Puerto Rico ("COSSEC"), the Government Development
Bank ("GDB"), the GDB Debt Recovery Authority and the three members
of its Board of Trustees, the GDB Public Entity Trust, the Puerto
Rico Fiscal Agency and Financial Advisory Authority ("FAFAA" or
"AAFAF"), the Puerto Rico Sales Tax Financial Corporation
("COFINA"), the Puerto Rico Highways and Transportation Authority
("HTA"), the Employees' Retirement System of the government of the
Commonwealth of Puerto Rico ("ERS"), the Puerto Rico Electric Power
Authority ("PREPA"), the Public Buildings Authority ("PBA"), the
Financial Oversight and Management Board ("FOMB") and its seven
members (plus one ex-officio member), as well as unidentified
securities firms, law firms and attorneys, accounting firms,
auditing firms, and insurance companies.

- 4 -
the Puerto Rico Oversight, Management, and Stability Act

("PROMESA"),4 the Credit Unions filed an adversary complaint

alleging the defendants, through conversations, meetings, and

presentations held between 2009 and 2015, as well as through

written policy guidance issued within the same timeframe, induced

them to purchase government bonds by both misrepresenting and

withholding information about the risks of the investment. The

district court dismissed the Credit Unions' claims, and, for the

reasons we explain below, we affirm.

LAYING THE GROUNDWORK

We begin, as we generally do, with a summary of the facts

and procedural history of the case. When we review the grant of

a motion to dismiss, "[a]ll facts are taken from the complaint and

accepted as true . . . and we disregard any conclusory

allegations." Ponsa-Rabell v. Santander Sec. LLC, 35 F.4th 26, 30

n.2 (1st Cir. 2022) (citing O'Brien v. Deutsche Bank Nat'l Tr.

Co., 948 F.3d 31, 35 (1st Cir. 2020)). We may also consider

documents attached to the complaint or incorporated by reference

therein. Id. (citing O'Brien, 948 F.3d at 35). We start with a

4 Detailed descriptions of PROMESA, its genesis, and its

structure abound in our case law. See, e.g., In re Fin. Oversight
& Mgmt. Bd. for P.R., 32 F.4th 67, 73-75 (1st Cir. 2022); Centro
de Periodismo Investigativo, Inc. v. Fin. Oversight & Mgmt. Bd.
for P.R., 35 F.4th 1, 5 (1st Cir. 2022). This opinion will
presume the reader's general familiarity with PROMESA's raison
d'être.

- 5 -
brief introduction of the defendants that the Credit Unions (also

referred to as the "cooperatives") allege and argue were actively

involved in the fraudulent scheme that forms the basis of their

claims.

The Corporación Pública para la Supervisión y Seguro de

Cooperativas de Puerto Rico ("COSSEC") is the agency through which

the Commonwealth of Puerto Rico establishes and implements

regulations and supervision over financial depository

institutions, including the plaintiff Credit Unions. COSSEC

generates what are known as "circular letters" several times per

year that address issues such as "[r]egulatory reporting

requirements," "[i]ncrease[s] in the allowed amount of investments

in Puerto Rico bonds," and "[r]equired insurance coverages." The

Credit Unions must comply with the circular letters, which are

enforced by COSSEC, or face potential adverse consequences such as

an administrative fine, removal of officers or directors, or

placement in receivership. The Credit Unions rely on information

provided by COSSEC about the Commonwealth's financial situation.

The Government Development Bank ("GDB") is a fiscal

agent of the Commonwealth that "designed, oversaw, controlled and

was in charge of all bond and debt issued by the Commonwealth and

its instrumentalities, including the issuance of the Puerto Rico

Debt Securities that were offered and sold to [the Credit Unions]."

The GDB had "specific knowledge" of the details of the

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Commonwealth's financial situation from 2009 onwards. The GDB

Debt Recovery Authority is a separate entity created by a 2017

statute for the purpose of implementing a debt restructuring plan

for the GDB's debts.

According to the Credit Unions as alleged in their

complaint, the GDB and other governmental agencies "adopted

regulatory measures over [the Credit Unions] to implement the

taking of their cash and liquid funds" all the while knowing the

likely "adverse effects" to the Credit Unions. These measures

included using COSSEC to place "excessive amounts of

unsustainable, materially diminished and value impaired

governmental instruments in [the Credit Unions'] investment

portfolios." From 2009 to 2015, through meetings and conversations

between agency officials,

[t]he Commonwealth, the GDB and COSSEC abused and

misused the governmental regulatory power over credit
unions, adopting a regulatory policy of steering credit
unions' liquid resources towards Puerto Rico Debt
Instruments which the Commonwealth and the GDB knew were
unsafe, risky, unsustainable and that lacked adequate
sources of repayment. This regulatory policy was
implemented through the issuance of circular letters
together with coercive and selective examinations and
the threat of retaliatory legislative initiatives. As
a result of this scheme, the Commonwealth and the GDB
took material portions of [the Credit Unions'] cash and
liquid assets without providing adequate compensation
for them.

The Credit Unions attached two of these circular letters as

exhibits to their pleading. In Circular Letter 09-03, issued in

- 7 -
2009, COSSEC "authorized the purchase of . . . bonds currently

offered by the Commonwealth of Puerto Rico through the [GDB]."

The letter stated that "[t]he cooperatives that participate in the

purchase of these investment products may benefit from the

advantages that these bonds offer," including as payment history

because the bonds are "backed by the Government, which guarantees

100% of interest and principal payments" and as collateral because

the "bonds are excellent guarantees, which allows investors to

apply for loans against their investment." The letter provided

that "cooperatives may purchase" the bonds, "as long as they ensure

that at the time of purchase" the bonds are rated within a certain

range of quality and creditworthiness classifications.5 The letter

reminded the cooperatives that acquisition of the bonds must be in

compliance with the governing regulations about limits of

investments but provided that COSSEC will not consider a drop in

classification after the date of acquisition or purchase of the

investment to be a violation of the governing regulations. Should

5"Municipal bond ratings determine the amount of investment

risk and interest cost on bonds used for financing government
projects. These ratings, much like a credit risk evaluation,
assess the following factors in determining the degree of interest
and risk:
• Current state of the economy
• Debt structure
• Financial condition
• Management practices"
Municipal Bond Ratings, Bondview,
https://www.bondview.com/municipal-bond-ratings/summary-rating,
last visited November 21, 2022.

- 8 -
the bonds' classification drop after purchase, the letter

authorized the Credit Unions to "perform an analysis to determine

the course of action to take in the best interest of the

institution." The Credit Unions allege that the "guarantee[d]

100% of interest and principal payments" statement was misleading

because members of COSSEC's board of directors knew the government

could not, given Puerto Rico's financial posture, honor repayment

to the Credit Unions.

In the other Circular Letter attached to the complaint

-- 2012-02 -- issued in 2012, COSSEC acknowledged Puerto Rico's

economic recession and explained that an "indirect effect of

increasing the levels of default for financial institutions" leads

to financial institutions' hesitancy to grant credit, which leads

to a higher proportion of "liquid resources" and an excess of

regulatory liquidity. Therefore, COSSEC was authorizing a 5%

increase (from 25% to 30%) in the total percentage of "liquid

resources in negotiable instruments" the cooperatives "may invest

in additional instruments."

The Credit Unions allege that, after COSSEC issued

Circular Letter 2012-02, the defendants "obtained around 156

million dollars from [them]" and that, by August 2017, the Credit

Unions had "heavily invested in securities issued by the Puerto

Rico government and its instrumentalities." The Credit Unions

contend that "[t]he taking of the cash, capital and liquid reserves

- 9 -
of the [Credit Unions] through the improper use of COSSEC's

regulatory authority was undertaken with knowledge by the GDB [and

other agencies] of the risks and difficulties surrounding Puerto

Rico's public finances" and that the GDB knowingly exposed the

Credit Unions to "higher concentrations of risk."

In addition, the Credit Unions aver that both the GDB

and COSSEC were derelict in their duties and failed to help devise

strategies to stabilize Puerto Rico's financial system in 2015

when the financial crisis was on the doorstep of the Commonwealth

or when the Credit Unions were actively involved in proposing ways

to mitigate the failure of the financial system and the restructure

of it. The Credit Unions further assert that Circular Letter 2012-

02 "allowed the government to take an increased amount of [Credit

Union] moneys in exchange for instruments of substantially

diminished value that had the consequence of a higher concentration

of risk in unsound Puerto Rico Debt Securities, which was a harmful

investment strategy for the [Credit Unions]." The Credit Unions'

professed damages include monetary losses in income, principal,

capital, and liquidity, market value losses for the debt securities

they continue to hold, reputational losses, and business losses.6

6 In spite of being defrauded, the Credit Unions allege that

they have nonetheless shown growth and remained stable financial
institutions throughout Puerto Rico's financial crunch.

- 10 -
 In March 2018, the Credit Unions initiated this

adversary proceeding against the Commonwealth of Puerto Rico,

COSSEC, the GDB, the GDB Debt Recovery Authority, the members of

the GDB Debt Recovery Authority's Board of Trustees, the FOMB, the

individual members of the FOMB, the Puerto Rico Fiscal Agency and

Financial Advisory Authority ("FAFAA" or "AAFAF"), and five of the

Title III co-defendant debtors: the Puerto Rico Sales Tax

Financing Corporation ("COFINA"), the Employees Retirement System

("ERS"), the Highways and Transportation Authority ("HTA"), the

Public Buildings Authority ("PBA"), and the Electric Power

Authority ("PREPA"). The Credit Unions requested an exception

from discharge of their debts alleged in the Title III proceeding,

advancing two primary theories of recovery. First, pursuant to 11

U.S.C. §§ 105 and 944, on the basis that the defendants' conduct,

which the Credit Unions alleged was fraudulent, should disqualify

them from dischargeability of the defendants' debts related to the

Credit Unions' claims. Second, citing PROMESA, the Credit Unions

requested a declaratory judgment and exception to discharge based

on the defendants' allegedly fraudulent conduct. The Credit Unions

also listed some specific common law claims such as breach of

contract, breach of warranties, and promissory estoppel, as well

as federal and Puerto Rico statutory claims such as violations of

- 11 -
statutes related to securities, negligence, fiduciary obligation,

and fraud.7

In response, the defendants filed motions to dismiss all

the counts for failure to state claims upon which relief can be

granted pursuant to Fed. R. Civ. P. 12(b)(6), the fraud-based

claims for failure to meet the particularity requirement of Fed.

R. Civ. P. 9(b), the Puerto Rico law-based claims under Fed. R.

Civ. P. 12(b)(1) as time-barred by statutes of limitations, and

claims alleged against some of the defendants also under Rule

12(b)(1) on the basis that the claims were either not yet ripe or

moot. After several skirmishes over the Credit Unions' efforts to

amend their complaint, the district court ultimately allowed a

second amended complaint ("SAC") (the operative complaint in this

appeal), which beefed up the factual allegations to support the

extant claims.8 The SAC sets forth seven counts against the various

7 Shortly after the Credit Unions filed their initial

complaint, the district court allowed the Official Committee of
Unsecured Creditors to intervene.

8 The Credit Unions' motion to amend their pleading to file a

second amended complaint lingered awhile because the parties
litigated a second case the Credit Unions had filed against COSSEC.
As summarized by the district court in its decision to allow the
Credit Unions to file the second amended complaint, this second
case sought "a declaration that COSSEC . . . was insolvent and an
injunction requiring the Commonwealth to lend money to COSSEC."
The district court denied the injunction, see Docket Entry 24 in
Case No. 19-AP-389, and although the Credit Unions filed a notice
of appeal, they subsequently voluntarily dismissed it.

- 12 -
defendants, specifically (and as relevant to this appeal) the SAC

contends that:

• COFINA, HTA, ERS, and PREPA (through the GDB as each agency's

"fiscal agent") benefited from the fraudulent actions and

omissions such that the plaintiffs' claims in the Title III

cases should be excepted from discharge pursuant to 11 U.S.C.

§§ 105 and 944 (count 1);

• plaintiffs should be designated as a separate class for the

Title III case and granted a declaratory judgment and

exception to discharge pursuant to the purposes of PROMESA

(count 2);

• the Commonwealth, through the GDB and COSSEC and the circular

letters, engaged in fraudulent actions and omissions and are

liable under Puerto Rico's Act Against Organized Crime (count

3);

• (labeled "breach of contractual obligations") the GDB,

COSSEC, and the Commonwealth's fraudulent misrepresentations

and omissions damaged the Credit Unions, or in the

alternative, these entities caused harm to the Credit Unions

through gross negligence (count 4);

• (labeled "torts claim") COSSEC and its directors engaged in

fraudulent acts for which they are separately and civilly

- 13 -
 liable under the general Puerto Rico torts statute (count 5);

and

• "[t]he illegal appropriation of the [Credit Unions'] moneys

. . . by the Commonwealth, through the use of its regulatory

powers, to fund an insolvent government, violates the takings

clause of the Constitution of Puerto Rico, Article II § 9,

and the Constitution of the United States, Amendment V" (count

6).9

Again, the defendants filed motions to dismiss the entire SAC for

the same reasons they asserted in their initial motions to dismiss

the first complaint.10 For reasons we'll explore momentarily, the

district court granted the motions, dismissing the entire SAC

against all the defendants, and, on January 4, 2022, entered final

judgment. The Credit Unions timely appealed; their subsequent

briefing challenges only the dismissal of counts 1-6 as against

the Commonwealth, COSSEC, the GDB, and the GDB Debt Recovery

Authority.

The seventh count alleged unjust enrichment -- the dismissal

9

of this claim is not pressed on appeal.

The FOMB filed its motion to dismiss on behalf of itself,

10

the Commonwealth, and the five debtor-defendants (COFINA, PREPA,

HTA, PBA, ERS). COSSEC, AAFAF, and the Official Committee of
Unsecured Creditors joined the FOMB's motion. The GDB and GDB
Debt Recovery Authority each filed its own motion to dismiss.

- 14 -
 A SET OF LENSES FOR OUR REVIEW

We review the district court's dismissal of the Credit

Unions' claims pursuant to Rule 12(b)(1) and 12(b)(6) de novo.

Ponsa-Rabell, 35 F.4th at 32; Álvarez-Maurás v. Banco Popular of

P.R., 919 F.3d 617, 622 (1st Cir. 2019). "We may affirm the

dismissal on any basis available in the record." Ponsa-Rabell, 35

F.4th at 32 (cleaned up) (quoting Yan v. ReWalk Robotics Ltd., 973

F.3d 22, 30 (1st Cir. 2020)). "To survive a [12(b)(6)] motion to

dismiss, a complaint must contain sufficient factual matter,

accepted as true, to state a claim to relief that is plausible on

its face." Id. (internal quotation marks omitted) (quoting

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). We need to decide

"whether all the facts alleged, when viewed in the light most

favorable to the plaintiffs, render the plaintiff's entitlement to

relief plausible." Ocasio-Hernández v. Fortuño-Burset, 640 F.3d

1, 14 (1st Cir. 2011). "No single allegation in a complaint need

lead to the conclusion of some necessary element, provided that,

in sum, the allegations of the complaint make the claim as a whole

at least plausible." Falmouth Sch. Dep't v. Doe ex rel. Doe, 44

F.4th 23, 47 (1st Cir. 2022) (cleaned up) (quoting Ocasio-

Hernández, 640 F.3d at 14-15).

Because several of the Credit Unions' claims are based

on the defendants' allegedly fraudulent conduct, our review

includes a deeper scrutiny of the plaintiffs' allegations. See

- 15 -
Katz v. Belveron Real Est. Partners, LLC, 28 F.4th 300, 308 (1st

Cir. 2022) ("[H]eightened pleading requirements apply not only to

claims of fraud simpliciter but also to related claims as long as

the central allegations of those claims effectively charge fraud."

(quoting Foisie v. Worcester Polytechnic Inst., 967 F.3d 27, 49

(1st Cir. 2020))). Pursuant to Rule 9(b), the plaintiffs "must

state with particularity the circumstances constituting fraud."

Fed. R. Civ. P. 9(b). The pleader of a fraud claim "is expected

to specify the who, what, where, and when of the allegedly false

or fraudulent representation." Alt. Sys. Concepts, Inc. v.

Synopsys, Inc., 374 F.3d 23, 29 (1st Cir. 2004) (citing Powers v.

Bos. Cooper Corp., 926 F.2d 109, 111 (1st Cir. 1991)). Moreover,

where, as here, a plaintiff pleads in part fraud by omission in a

securities-related fraud case, we've said that "a plaintiff must

first identify a statement made by defendants, show how the

omission rendered that statement misleading, and finally establish

that there was a duty to disclose the omitted information." Ponsa-

Rabell, 35 F.4th at 34.

WORKING THROUGH THE ISSUES

The Credit Unions challenge several portions, though not

all, of the district court's comprehensive decision granting the

defendants' motions to dismiss, including, as against the

Commonwealth, the GDB, and COSSEC, the dismissal of all the fraud-

based claims for failure to meet the Rule 9(b) heightened pleading

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standard (counts 1-5), the dismissal of the Puerto Rico law-based

claims (counts 4 and 5) as time-barred, and the dismissal of the

takings claim as not plausibly pled.11 We will supply additional

factual allegations as needed to provide the full context of each

issue as we work through the Credit Unions' arguments.

Allegations of Fraud

On appeal, the Credit Unions do not dispute that their

first five counts sound in fraud; before us they focus on arguing

that they have plausibly alleged fraudulent conduct on the part of

the Commonwealth, COSSEC, and the GDB with sufficient

particularity to satisfy Rule 9(b) and to survive the defendants'

12(b)(6) motion to dismiss.12 We disagree and explain why.

We proceed with our de novo review of the allegations

upon which the Credit Unions focus in light of the general elements

11In response, the FOMB again writes on behalf of the

Commonwealth and the five debtor-defendants, and COSSEC and AAFAF
filed a joint brief (though the Credit Unions do not challenge the
district court's dismissal of the SAC as against the debtor-
defendants or AAFAF). The GDB and the GDB Debt Recovery Authority
each filed their own responsive brief.

The Credit Unions spill quite a bit of ink in their opening

12

brief and reply brief arguing that the district court misapplied
both Rules 12(b)(6) and 9(b) by failing to take their well pled
allegations as true, failing to draw reasonable inferences in their
favor, and holding them to an "unattainable" and "excessively high
pleadings standard" for the claims sounding in fraud. After
reviewing the district court's decision granting the motions to
dismiss, we disagree. The district court accurately described and
applied the heightened pleading standard for claims based on
fraudulent conduct and, after taking a fresh look, for the reasons
explained herein, we arrive at the same conclusions drawn by the

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of a Puerto Rico fraud claim.13 To plausibly allege fraud, the

plaintiffs must provide sufficiently specific factual allegations

regarding four elements: "(1) a false representation by the

defendant; (2) the plaintiff's reasonable and foreseeable reliance

thereon; (3) injury to the plaintiff as a result of the reliance;

and (4) an intent to defraud." P.R. Elec. Power Auth. v. Action

Refund, 515 F.3d 57, 66 (1st Cir. 2008) (citing Microsoft Corp. v.

Comput. Warehouse, 83 F. Supp. 2d 256, 262 (D.P.R. 2000)),

(abrogated on other grounds as recognized in Portugues-Santana v.

Rekomdiv Int'l, 657 F.3d 56 (1st Cir. 2011)); see also P.R. Laws

Ann. Tit. 31, § 3408 (governing claims for "deceit" or fraud in

the inducement -- "[t]here is deceit when by words or insidious

district court with respect to the lack of specificity with which

the Credit Unions have alleged fraudulent conduct.
In a separately enumerated issue in their brief, the Credit
Unions say the district court also erred by applying the wrong
"judicial scrutiny standard" in light of the Credit Unions'
allegations of government misconduct and ignoring the duty (though
without identifying whose duty) to fulfill PROMESA's mandate of
promoting governmental transparency. As best we can tell, the
Credit Unions are arguing that the dismissal of this adversary
proceeding is unfair because it does not allow them to reach the
discovery phase of this litigation so that they can uncover the
details not currently within their access and control. Again, as
we discuss herein, the Credit Unions did not meet the heightened
pleading standard. Moreover, the plaintiffs have not persuaded us
that they are entitled either to a pass on this standard or to a
different standard because they are alleging misconduct
perpetrated by the government.

13 In the SAC, the Credit Unions did not allege fraudulent

conduct pursuant to any specific federal or Commonwealth
securities laws.

- 18 -
machinations on the part of one of the contracting parties the

other is induced to execute a contract which without them he would

not have made").

This court "strictly applie[s] Rule 9(b) . . . in the

securities context," holding that the particularity with which

plaintiffs must plead "supporting facts applies 'even when the

fraud relates to matters peculiarly within the knowledge of the

opposing party.'" New Eng. Data Servs., Inc. v. Becher, 829 F.2d

286, 288 (1st Cir. 1987) (quoting Wayne Inv., Inc. v. Gulf Oil

Corp., 739 F.2d 11, 14 (1st Cir. 1984)) (both cases holding general

allegations made "based on information and belief" were

insufficiently specific); see also Greebel v. FTP Software, Inc.,

194 F.3d 185, 193 (1st Cir. 1999). Unlike the plaintiffs in Becher

and Wayne Investment, the Credit Unions do provide some factual

allegations beyond "based-on-information-and-belief" assertions.

However, after carefully scrutinizing the SAC back to front, we

believe that the plaintiffs stumble at plausibly pleading even the

first element of fraud -- false representations by the defendants.

Combing through the SAC, we see that it primarily

outlines a broad and vague fraudulent scheme involving (a) COSSEC's

issuance of the two circular letters attached to the SAC and

summarized above, (b) meetings and conversations between COSSEC,

the GDB, and the Commonwealth, and (c) a presentation by COSSEC.

Each encounter involved spreading information that the defendants

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allegedly knew to be false at that time, resulting in the Credit

Unions' losing investments in the Puerto Rico debt securities.

But the allegations here flunk the plausibility test because the

SAC does not come close to providing the required level of

particularity to satisfy Rule 9(b).

For example, the Credit Unions repeatedly mention

"meetings and conversations between officials of the GDB, the

governor's office and COSSEC['s chairman and executive president]"

and between COSSEC officials in preparation for and at COSSEC's

Board of Directors' meetings prior to issuing Circular Letter 09-

03. In other words, the allegations are about communication

between agency officials. But importantly, the SAC does not

identify when these encounters took place or when and how they led

to misrepresentations made directly to one or more of the Credit

Unions. For example, although the Credit Unions assert in their

brief that the SAC "[e]xplains how COSSEC's Executive President

pressured Plaintiffs to 'cooperate' with the Government's

financial needs," the part of the SAC to which they cite in support

alleges only that the government misused its regulatory authority

through meetings and conversations between COSSEC's Chairman,

COSSEC's Executive President, and (unidentified) officials at the

GDB and governor's office. The SAC does not allege a conversation

or meeting with officials from the Credit Unions.

- 20 -
 Another particularity deficiency is found in the

allegation that "COSSEC's Board of Directors and COSSEC's

Executive President . . . 'warned' [the Credit Unions] that in the

absence of said 'cooperation' it would be necessary to reevaluate

the tax-exempt status of Cooperatives." This purported threat is

missing an anchor to an alleged time and place; who issued the

threat to whom and when? The Credit Unions also allege that COSSEC

"summoned the cooperatives to its headquarters" shortly after the

2009 Circular Letter issued and "sponsored a presentation by the

GDB to the[m] about the purported virtues of the Puerto Rico

bonds," and that this presentation was a key part of its scheme

"to obtain funding from the Cooperatives for the government's

unsustainable spending while knowing that the Commonwealth did not

have the financial means and capability of honoring the bonds in

case of default." But again, we see no details about particular

statements made or information provided or withheld about the bonds

during this presentation. Other allegations in the SAC describe

how some defendants allegedly forced officials in other defendant

agencies or instrumentalities to take actions but provide no

specifics about how, when, what actions, or which plaintiffs were

affected by this pressure.14

14A quick aside about the two circular letters highlighted

as playing a starring role in the defendants' alleged scheme to
defraud. False, say the Credit Unions, are the statements in
Circular Letter 09-03 about the purported advantages of the

- 21 -
 We also examine the Credit Unions' allegations that the

defendants knew the bonds would decline in value at the time the

bonds were proposed in the circular letters and subsequently issued

to the plaintiffs because, as the leaders of the Commonwealth's

financial policy, the Commonwealth, the GDB, and COSSEC had to

have known Puerto Rico's "financial situation." Therefore (the

way the plaintiffs tell it in the SAC), the defendants knew the

bonds were worthless and admitted as much when COSSEC wrote in

Circular Letter 09-03 that it would not consider any future drop

in the securities' quality and creditworthiness classifications as

violations of the regulations governing the Credit Unions'

investments. But (and as the district court noted), these

authorized bonds (government backing guaranteeing "100% of

interest and principal payments" and the bonds serving as
"excellent collateral"). We read the Credit Unions' allegations
about the allegedly knowing misrepresentations in these two
letters "in light" of the letters' full text, see Clorox Co. P.R.
v. Proctor & Gamble Com. Co., 228 F.3d 24, 32 (1st Cir. 2000),
keeping in mind that these documents can "trump the complaint's
allegations if a conflict exists" between them, Schatz v.
Republican State Leadership Comm., 669 F.3d 50, 55 n.3 (1st Cir.
2012). The actual language of the letter can be read to contradict
the Credit Unions' assertions: The letter plainly states (emphasis
ours) that "these investment products may benefit from the
advantages that these bonds offer" -- there is no guarantee these
benefits will come to fruition. As such, this plain language would
seem to trump the allegations about the deliberately and knowingly
misleading statements in the letter and we, accordingly, do not
credit the spin in the Credit Unions' allegations about the
purported guarantee of the advantages of investing in the bonds.
See id. at 57. Even if there was no conflict in the language of
the SAC as compared to the letters, the Credit Unions failed to
adequately plead knowledge of the falsity of any allegedly false
statements, as we next explain.

- 22 -
allegations about what the defendants must have known by virtue of

their roles governing the Commonwealth's fiscal policy are too

broad and speculative. See N. Am. Catholic Educ. Programming

Found., Inc. v. Cardinale, 567 F.3d 8, 13 (1st Cir. 2009) ("The

courts have uniformly held inadequate a complaint's general

averment of the defendant's 'knowledge' of material falsity,

unless the complaint also sets forth specific facts that make it

reasonable to believe that [the] defendant knew that a statement

was materially false or misleading." (quoting Greenstone v. Cambex

Corp., 975 F.2d 22, 25 (1st Cir. 1992) (Breyer, J.) (citations

omitted), superseded by statute on other grounds) (emphasis in

original)). The plaintiffs do not challenge the Title III court's

explanation that a particular pleading of knowledge was required,

but instead contend that they pled the defendants had "knowledge

of th[e] falsity" of their representations. Without any specific

details to demonstrate the defendants' particular knowledge about

the status of the bonds, the implication about the connection

between the defendants' identities and what they knew and when

requires too broad an inferential leap. See id.; see also Wayne

Inv., Inc., 739 F.2d at 14 (speculative allegations about fraud do

not meet the strictures of Rule 9(b)). Rather, the Credit Unions

had to plead facts specifically and plausibly demonstrating the

defendants knew what they said was wrong at the time they said it.

- 23 -
 Moreover, as we earlier noted, to plausibly plead fraud

by omission in a securities-related fraud case, a plaintiff must

"first identify a statement made by defendants, show how the

omission rendered that statement misleading, and finally establish

that there was a duty to disclose the omitted information." Ponsa-

Rabell, 35 F.4th at 34. However, "[o]ur case law is clear" that

"[i]t is not a material omission to fail to point out information

of which the market is already aware." Id. at 35 (quoting Baron

v. Smith, 380 F.3d 49, 57 (1st Cir. 2004)). There is no "duty to

repeat information already known or readily accessible to

investors." Id. Circular Letter 2012-02 justified the Credit

Unions' purchase of government bonds at a higher rate than usual

by explicitly pointing out the Commonwealth's state of economic

recession. Therefore, we can infer that the Credit Unions, when

making their investment decisions, were made aware, by the

defendants, of the fact that the economy in Puerto Rico was not at

its strongest point.15 We also know (because the plaintiffs told

15 Although the defendants do not present any argument that

the Credit Unions were sophisticated purchasers of the securities,
we have previously noted a plaintiff's level of sophistication
when evaluating the reasonableness of the investors' reliance on
the alleged misrepresentations in a Puerto Rico fraud claim. See
Feliciano-Muñoz v. Rebarber-Ocasio, 970 F.3d 53, 59, 64-65 (1st
Cir. 2020) (concluding on summary judgment for the plaintiff's
Puerto Rico statutory deceit claim that no jury could find the
buyer-plaintiff reasonably relied on the defendant's false
statement given the plaintiff's sophistication as a buyer); P.R.
Elec. Power Auth., 515 F.3d at 67 (reasoning that PREPA's
sophistication was one reason it could not have reasonably relied

- 24 -
us) that they actively proposed ways to mitigate the financial

issues the Commonwealth faced; they allege they accepted

invitations from the government to discuss Puerto Rico's debt which

culminated in a legislative proposal, adopted into law in December

2015.

Wrapping up this aspect of the Credit Unions' appeal, as

we stated above, specificity is the name of the game when alleging

fraud, and the Credit Unions have not filled the bill here. See

Synopsys, Inc., 374 F.3d at 29-30 (affirming dismissal of

misrepresentation claim when allegations sketched a scheme to

mislead the plaintiff and withhold information without specifying

"who allegedly uttered the misleading statements, to whom they

were made, where they were made, when they occurred, and what

actions they engendered"). Nor have they helped us understand how

the allegations they have made are sufficient in the context of

our binding precedent to survive the defendants' motions to dismiss

for failure to state a plausible claim. See Falmouth Sch. Dep't,

44 F.4th at 47 (affirming the dismissal of statutory counterclaims

in part because the "laundry list of allegations" recited in the

complaint, even when considered as a whole picture, were too

conclusory and the cross-appellant failed to cite to any analogous

case for support). We agree with the district court's conclusion

on the defendant's alleged misrepresentation for PREPA's fraud

claim).

- 25 -
that the "allegations here amount to conclusory assertions that

fraud occurred at unspecified meetings attended by unspecific

individuals over a four-year period." So we affirm the dismissal

of the fraud-based counts for not meeting the requirements of Rule

9(b).16

16 Part of the Credit Unions' count 1 claim seeking an

exception to discharge of their Title III bankruptcy claims is
premised upon the GDB's debt restructuring plan completed in 2018.
Pursuant to Title VI of PROMESA (PROMESA § 601), in 2018 the
district court issued an order approving a Qualifying Modification
("QM") to restructure the GDB's debts. PROMESA provides that a QM
may issue after a consultation between the bond issuer and holders,
resulting in a voluntary agreement reviewed and approved by the
FOMB as meeting specific statutory criteria. 48 U.S.C. § 2231(a),
(g). PROMESA also provides that a QM "will be conclusive and
binding on all holders of Bonds whether or not they have given
such consent." Id. at § 2231(m) (emphasis added). The district
court concluded that the Credit Unions' request for exception from
discharge from debts owed to them by the GDB was moot because the
GDB had already modified its debts pursuant to the approved QM.
Before us, the Credit Unions contend the district court's
mootness conclusion is wrong because they were not GDB bondholders
at the time of the QM, and they say the SAC timely questions
(through its allegations of fraudulent conduct on the part of the
defendant-debtors) whether the QM is binding on them. Contrary to
the assertions in the plaintiffs' briefing, however, the SAC
includes information that the Credit Unions were in fact
bondholders when the QM was approved. The Credit Unions also
admitted during oral argument that some of them -- though perhaps
not each -- were indeed bondholders at the time of the QM. Even
if the Credit Unions' fraud claims were adequately pled, we agree
with the GDB that the Credit Unions were bondholders at the time
of the QM process such that the completion of this process rendered
the Credit Unions' subsequent request for exception from discharge
moot. See Redfern v. Napolitano, 727 F.3d 77, 83-84 (1st Cir.
2013) ("[F]ederal courts 'lack constitutional authority to decide
moot questions'" when, for example, "the issue[] presented [is] no
longer live." (first quoting Barr v. Galvin, 626 F.3d 99, 104 (1st
Cir. 2010), then Maher v. Hyde, 272 F.3d 83, 86 (1st Cir. 2001))).

- 26 -
 Puerto Rico Claims Time-Barred

In counts 4 and 5, the Credit Unions set forth claims

for negligence and fraud against the Commonwealth, COSSEC, and the

GDB, citing P.R. Laws Ann. Tit. 31, §§ 3018, 3019, 3020, 3021,

3408, and 5141.17 In addition to moving to dismiss these counts

as not plausibly pled, the defendants also argued that the statutes

of limitations for each count expired prior to the Credit Unions'

initiating this adversary proceeding. Agreeing with the

defendants, the district court dismissed these claims pursuant to

Rule 12(b)(1), reasoning that the statutes of limitations for each

of these claims were either one year, see P.R. Laws Ann. Tit. 31,

§ 5298 (providing a one-year statute of limitation for "[a]ctions

to demand civil liability . . . for obligations arising from the

fault or negligence mentioned in § 5141 of this title, from the

time the aggrieved person had knowledge thereof"), or two years

for the securities-related fraud claims, see PaineWebber Inc. of

P.R. v. First Bos. (P.R.) Inc., 136 P.R. Dec. 541, 545-46 (P.R.

1994) (certified translation at 3-4)). Continuing, the district

court concluded the Credit Unions were aware of their potential

claims for damages by December 2015 because, as alleged in the

SAC, they proposed and drafted legislation "to provide stability

17The Credit Unions tagged count 4 as "breach of contractual

obligations" but the allegations claim fraudulent inducement into
agreements and negligence and cite statutes governing fraud and
negligence.

- 27 -
to the [financial] system." The district court noted that the

Credit Unions did not dispute that their claims were governed by

either a one- or two-year statute of limitations. Instead, they

argued that equitable tolling should apply because the Credit

Unions diligently pursued their rights and extraordinary

circumstances such as Hurricane Maria got in the way of a timely

filing.

Before us, the Credit Unions argue anew that the

applicable statutes of limitations are equitably tolled,

emphasizing again that the SAC spells out the variety of their

efforts from 2015 to the present to work with the defendants about

the financial crisis and the Credit Unions' losses therefrom,

including conversations with various government agencies and the

FOMB, and that the defendants know "firsthand" about these efforts

and will be able to review materials related thereto during the

discovery process. Nonetheless, the district court concluded the

Credit Unions' efforts to work with the agencies did not excuse

them "from timely pursuing litigation with respect to claims

related to their known injury."

We have already affirmed the dismissal of the fraud-

based part of counts 4 and 5 pursuant to Rule 12(b)(6), but to the

extent these two counts include non-fraud related claims (i.e.,

negligence based on Puerto Rico law), we briefly review, and

reject, the Credit Unions' equitable tolling arguments.

- 28 -
"Equitable tolling is available 'in exceptional circumstances' to

extend the statute of limitations." Vistamar, Inc. v. Fagundo-

Fagundo, 430 F.3d 66, 71 (1st Cir. 2005) (quoting Neverson v.

Farquharson, 366 F.3d 32, 40 (1st Cir. 2004)). However,

"[e]quitable tolling, if available at all, is the exception rather

than the rule; resort to its prophylaxis is deemed justified only

in extraordinary circumstances," id. (quoting Delaney v. Matesanz,

264 F.3d 7, 14 (1st Cir. 2001)), such as "when the circumstances

that cause a plaintiff to miss a filing deadline are out of his

hands," id. at 72 (quoting González v. United States, 284 F.3d

281, 291 (1st Cir. 2002)). The Credit Unions rely on the hurricane

as the basis for their entitlement to equitable tolling. Taking

as true their allegations of actual loss on the bonds in 2015 and

of their efforts to work with the government at that time to

mitigate that loss, the one-year statutes of limitations for their

negligence-based claims expired prior to the hurricane in the fall

of 2017. Equitable tolling, therefore, cannot rescue from

dismissal the untimely non-fraud-based part of counts 4 and 5.

Takings Claim

In the SAC, the Credit Unions allege that the defendants

used "regulatory powers" to take "material portions of Plaintiffs'

cash and liquid assets," resulting in "illegally appropriat[ing]

the moneys of the Cooperatives to finance the government operation"

by providing "materially diminished and value impaired government

- 29 -
papers that did not constitute just compensation."18 According to

the plaintiffs, the defendants used the circular letters to compel

the Credit Unions "to purchase knowingly materially diminished and

value impaired government bonds," "depriv[ing] the Cooperatives'

property of any significant economic value." The Credit Unions

allege the defendants' actions resulted in both a per se physical

taking and a categorical regulatory taking.

18 A brief overview of takings claims in general may be helpful

here. "The Takings Clause of the Fifth Amendment provides that
'private property [shall not] be taken for public use, without
just compensation.'" Asociación De Subscripción Conjunta Del
Seguro De Responsabilidad Obligatorio v. Flores Galarza, 484 F.3d
1, 27 (1st Cir. 2007) (quoting U.S. Const. amend. V). "To make a
cognizable claim of a taking in violation of the Fifth Amendment,
the plaintiffs must first show that they possess a recognized
property interest which may be protected by the Fifth Amendment."
Id. (quoting Wash. Legal Found. v. Mass. Bar Found., 993 F.2d 962,
973 (1st Cir. 1993)). "Assuming that the plaintiff can establish
a constitutionally protected property interest, the plaintiff must
next show that the challenged action 'caused an illegal taking of
that interest.'" Id. (quoting Wash. Legal Found., 993 F.2d at
974) (cleaned up). "The Supreme Court has recognized two types of
takings: physical takings and regulatory takings." Id. at 27-
28. "A physical taking occurs either when there is a condemnation
or a physical appropriation of property." Id. at 28 (quoting
Philip Morris, Inc. v. Reilly, 312 F.3d 24, 33 (1st Cir. 2002) (en
banc)). "Physical takings challenges 'involve the straightforward
application of per se rules,' which means that 'when the government
physically takes possession of an interest in property for some
public purpose, it has a categorical duty to compensate the former
owner.'" Id. (quoting Tahoe–Sierra Pres. Council, Inc. v. Tahoe
Reg'l Plan. Agency, 535 U.S. 302, 322 (2002)) (cleaned up). "A
regulatory taking transpires when some significant restriction is
placed upon an owner's use of his property for which 'justice and
fairness' require that compensation be given." Philip Morris, 312
F.3d at 33 (quoting Goldblatt v. Hempstead, 369 U.S. 590, 594
(1962)). "When a regulation denies all economically beneficial or
productive uses of land, it is a taking." Id. (citing Lucas v.
S.C. Coastal Council, 505 U.S. 1003, 1015 (1992)).

- 30 -
 The defendants moved to dismiss this count as not stating

a plausible takings claim against them because the Credit Unions

alleged a post-purchase reduction in value of the bonds and because

a taking cannot occur unless the government's seizure of the

property in question destroys the entire value of the property.

The district court concluded the Credit Unions had not plausibly

alleged that "COSSEC's regulatory actions coerced or forced a

taking of the [Credit Union]'s property" because the two circular

letters upon which the plaintiffs specifically rely used

permissive language not mandatory language -- language that made

clear the ultimate decision whether to purchase the securities was

up to the Credit Unions.

Before this court, the Credit Unions argue that they

plausibly alleged their takings claim under both takings

theories.19 What their arguments boil down to is an assertion that

the district court failed to connect the dots the plaintiffs

plotted across the SAC which, according to the plaintiffs, "paints

a complete picture of a scheme designed to impose 'irresistible

19The Credit Unions also argue that the defendants' actions

amount to a non-categorical regulatory taking pursuant to the
three-factor analysis described in Penn. Cent. Transp. Co. v. City
of N.Y., 438 U.S. 104 (1978), arguing why their allegations are
sufficient to plausibly plead this alternative takings theory.
Problem is, the Credit Unions specifically alleged a direct taking
and categorical regulatory taking in the SAC but not a non-
categorical regulatory taking. So we'll say no more on this part
of their takings argument.

- 31 -
pressure' over the[m] . . . [;] a scheme that was made up of

several components, which should be analyzed jointly." Similar to

the basis for the fraud claims, these dot "components" include the

two Circular Letters (though the Credit Unions conceded at oral

argument that the express language authorized -- but did not

mandate -- the bond purchases) plus allegations that several other

circular letters issued between 2009 and 2012 (the contents of

these additional letters are not provided), that COSSEC often

announced policy changes through circular letters, and that

compliance with the letters is mandatory and subject to COSSEC's

enforcement. These components, say the Credit Unions, provide

sufficient factual information from which the district court

should have -- and we must -- reasonably infer that the "known

effect of the [l]etters, regardless of [their] particular formal

language, was to coerce or force the [Credit Unions] to follow

their content, even if seemingly painted as mere suggestion." In

this way, say the Credit Unions, the defendants knew the letters

would "apply irresistible pressure over the[m to purchase the

bonds] without having to expose themselves through an outright

command to purchase the bonds." The Credit Unions insist this

whole picture, viewed properly and as adequately sketched in their

- 32 -
complaint, is enough for their takings claim (under either takings

theory) to survive the motion to dismiss.20

20 During oral argument, we tried to pin down the Credit

Unions' precise theory about what property had been taken and how
because the Credit Unions did not allege a complete loss of their
entire investments but instead the SAC repeatedly mentions the
"materially diminished and value impaired government instruments."
The problem there is that our court has long held that "per se
regulatory takings occur where the regulations completely deprive
an owner of all economically beneficial use of her property,"
Franklin Mem'l Hosp. v. Harvey, 575 F.3d 121, 126 (1st Cir. 2009)
(cleaned up, citations omitted), not simply a diminution in value.
In addition, a plaintiff needs to allege the complete loss of a
specific interest in the property taken. See Parella v. Ret. Bd.
of R.I. Emp. Ret. Sys., 173 F.3d 46, 58 (1st Cir. 1999)
("plaintiffs must first establish an independent property right
before they can argue that the state has taken that right without
just compensation") (citing Eastern Enter. v. Apfel, 524 U.S. 498
(1998)); see also In re Fin. Oversight & Mgmt. Bd., 41 F.4th 29,
41-42 (1st Cir. 2022) (where all parties agreed "that the
Commonwealth (or one of [its] instrumentalities . . . ) took
private property" -- i.e., money -- from the takings claimants").
The Credit Unions are instead laser-focused on the manner of the
taking being the totality of the circumstances present at the time
they purchased the bonds; the circumstances including the combined
coercive force of the circular letters and the multi-faceted
relationship they are locked into with COSSEC.
As best we can tell, based on closely examining the SAC, the
Credit Unions' takings claim theory seems to be that they were
compelled to spend more on the bonds than the bonds were worth on
the date of purchase. Problem is, merely alleging in the SAC an
after-purchase decline in the value of the bonds in support of
this theory does not, in and of itself, mean the bonds were not
worth what the Credit Unions paid at the time of purchase. And
relatedly, the allegations in the SAC about what the government
and its instrumentalities knew at the time the Credit Unions
purchased the bonds are all no-meat-on-the-bones conclusory in
nature, e.g., the "instruments lacked true value," and the
defendants pushed the bonds "with full knowledge of the
government's lack of financial capacity to pay." See Ocasio-
Hernández, 640 F.3d at 11-12 (to "show[] that the pleader is
entitled to relief," the allegations need "enough detail to provide
a defendant with 'fair notice of what the . . . claim is and the
grounds upon which it rests'") (first quoting Fed. R. Civ. P. 8(a)

- 33 -
 In retort, the defendants point out that the Credit

Unions simply have not alleged that they were required to purchase

the bonds authorized or up to the authorized level provided in the

circular letters. We agree, and emphasize that COSSEC's use of

permissive language in Circular Letters 09-03 and 2012-02 plainly

conflicts with the Credit Unions' allegations to the contrary and

belies their claim that they had no choice but to purchase the

bonds offered. See Schatz v. Republican State Leadership Comm.,

669 F.3d 50, 55 n.3 (1st Cir. 2012) (stating the documents attached

to the pleading can "trump the complaint's allegations if a

conflict exists" between them). These letters did not instruct

the Credit Unions to purchase the bonds. The only rational

inference to be drawn from these two letters is that the defendants

authorized and enticed the Credit Unions to purchase the bonds in

an amount representing up to 30% of their liquid assets. "[W]here

a property owner voluntarily participates in a regulated program,

there can be no unconstitutional taking." Franklin Mem'l Hosp. v.

Harvey, 575 F.3d 121, 129 (1st Cir. 2009) (citing Garelick v.

Sullivan, 987 F.2d 913, 916 (2d Cir. 1993)). The Credit Unions'

allegations about the so-called mandatory nature of the circular

and then quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007)). Ultimately, we need not determine the specific property
interest at play here because we conclude the Credit Unions failed
to plausibly plead coercion as the manner in which the government
and related entities deprived them of any property interest.

- 34 -
letters in general and COSSEC's general authority to force

compliance with regulations, taken as true, do not lead to the

inference that the defendants actually forced or compelled the

Credit Unions to purchase -- or would have punished the plaintiffs

if they had not invested in -- the bonds authorized by the two

letters specified in the SAC. Cf. Philip Morris, Inc. v.

Harshbarger, 159 F.3d 670, 678-79 (1st Cir. 1998) (holding

plaintiff was likely to succeed on its takings claim because a

state statute mandating disclosure of products' ingredients list

(a valuable trade secret) did not adequately safeguard against

potential public access to the list and therefore functionally

compelled the business to either disclose its trade secrets or

withdraw from the market). Indeed, as the Credit Unions also

alleged in the SAC, not all of the Credit Unions felt compelled to

purchase the bonds -- almost a quarter of the Credit Unions did

not purchase the bonds.

The Credits Unions' takings claim was properly dismissed

under Rule 12(b)(6).21

21 The Credit Unions also raise a couple of additional

arguments in their attempt to revive their complaint which we
acknowledge here but for various reasons find unpersuasive. First,
they assert that the district court "abused its discretion" by
entering the judgment dismissing the SAC a few weeks before
entering its order confirming the Title III final plan of
adjustment for the debts of the Commonwealth, the ERS, and the PBA
(wherein the district court overruled the Credit Unions'
objections to the final plan based in part on the dismissal of
this adversary proceeding). The Credit Unions argue that the

- 35 -
 WRAP UP

The district court's judgment is affirmed. Each party

shall bear their own costs.

district court deprived them of due process because the dismissal

of their adversary proceeding was not final (i.e., had not been
reviewed by this court) when the district court relied on it to
resolve their objections to the Title III plan, hamstringing the
Credit Unions' efforts to litigate their claims against the
defendants. As the defendants point out, the Credit Unions have
not provided any support for their thinly briefed contention that
the district court did anything wrong by adjudicating the motions
to dismiss pending before it, and we conclude this issue is waived
for lack of development. See Perea v. Ed. Cultural, Inc., 13 F.4th
43, 55 n.24 (1st Cir. 2021) ("[I]issues . . . unaccompanied by
some effort at developed argumentation[ ] are deemed waived."
(quoting United States v. Zannino, 895 F.2d 1, 17 (1st Cir.
1990))).
The Credit Unions also argue that the dismissal of the
adversary proceeding effectively provided the Title III debtors
with a free pass on their fraudulent actions and argue that if the
Credit Unions were to prevail on their claims against the
defendants in the adversary proceeding then they would be entitled
to an exception from discharge in the Title III case pursuant to
the Title III court's equitable power. The Credit Unions'
arguments about why the Title III court should have excepted its
claims from discharge are front and center in its appeal from the
confirmation order in the Title III case (No. 22-1079) so we do
not further address this argument here.

- 36 -