Puerto Rico Supreme Court Grants Certiorari and Reinstates Judgment in favor of Client Represented by MZLS After Modification at the Appellate Court

Certiorari and Judicial Review: Victory for RIOP Corporation

The Supreme Court of Puerto Rico granted a writ of certiorari and ruled in favor of RIOP Corporation, represented by MZLS, in the case RIOP Corporation v. José González Laabes (CC-2023-0730). With this decision, the Court fully reinstated the judgment issued by the Court of First Instance, reinforcing fundamental principles of contract law and fairness in commercial transactions.

MZLS represented RIOP Corp. in the certiorari stage, led by Anthony O. Maceira Zayas, securing a favorable ruling that reaffirms the application of the specific performance doctrine in contracts.

Understanding Certiorari in the Puerto Rico Supreme Court

A writ of certiorari in the Puerto Rico Supreme Court is a discretionary order issued by the Court to review the resolutions or judgments given by a lower court, such as the Court of First Instance. This writ allows the Supreme Court to examine lower court decisions and determine whether to uphold or reverse them.

According to 23 L.P.R.A. § 927, the Supreme Court of Puerto Rico may, at its discretion, review the resolutions or judgments given by a Court of First Instance through a writ of certiorari (23 L.P.R.A. § 927). Similarly, 23 L.P.R.A. § 743 states that a petition for a writ of certiorari can be filed within ten days after the entry of judgment or order by the Court of First Instance. The Supreme Court will conduct the review in the manner established by law and regulations (23 L.P.R.A. § 743).

In practice, the Supreme Court of Puerto Rico uses the writ of certiorari to review various types of decisions, including those related to criminal procedures, administrative decisions, and other legal matters.

For example, in Pueblo v. Morales Rivera, the petitioner filed a writ of certiorari before the Supreme Court of Puerto Rico, which then gave the Solicitor General a term to show cause why the writ should not be granted (Pueblo v. Morales Rivera, 1986 JTS 105 (1986)).

Similarly, in Ramon Delgado Rodriguez v. Departamento De Servicios Contra La Adiccion, the Supreme Court issued a writ of certiorari to review a decision by the Superior Court and subsequently reversed the lower court's resolution (Ramon Delgado Rodriguez, Peticionario v. Departamento De Servicios Contra La Adiccion, Recurrido., 1983 JTS 42 (1983)).

The procedure for filing petitions for certiorari is governed by specific rules, including Rules 21, 22, and 23 of the Supreme Court of Puerto Rico, which establish the requirements and process for certiorari review (Villaneuva v. Hernandez Class, 1991 JTS 58 (1991)). These rules ensure that the judicial review process is conducted in an orderly and legally compliant manner.

Overall, a writ of certiorari in the Puerto Rico Supreme Court serves as a crucial mechanism for judicial oversight, allowing the highest court in the jurisdiction to correct potential legal errors made by lower courts and uphold the rule of law.

Case Background: Breach of a Lease-to-Purchase Agreement

This litigation originated from a lease-to-purchase contract signed in 2017, granting RIOP Corp. the right to acquire a property in Rincón, Puerto Rico.

The contract stipulated that the purchase option had to be exercised within five years at a fixed purchase price of $800,000.00. RIOP Corp. exercised its right within the agreed period and secured financing to complete the transaction. However, the seller refused to proceed with the sale, claiming that certain areas of the property were not included in the contract.

Due to this refusal, RIOP Corp. was forced to continue paying lease fees while litigating the enforcement of the contract. To assert its rights, RIOP Corp. filed a lawsuit for breach of contract and damages, requesting:

• Specific performance of the contract.

• Reimbursement of improperly paid lease fees.

• Recognition of its right to acquire the entire property.

Court of First Instance Decision

The Court of First Instance ruled in favor of RIOP Corp., ordering:

• Specific performance of the contract, including the disputed land.

• Reduction of the purchase price, deducting lease payments made since RIOP Corp. exercised its purchase option.

• Financing of the purchase for 20 years at an interest rate of 6%.

• Payment of attorney’s fees and court costs due to the seller’s bad faith.

The Court based its decision on the pacta sunt servanda principle, recognized in Article 1210 of the Puerto Rico Civil Code, which establishes that contracts are binding between the parties and must be fulfilled under their terms.

Court of Appeals Modification and Certiorari Petition

The seller appealed the decision to the Court of Appeals, which modified the ruling in two key aspects:

1. Eliminated the deduction of lease payments from the purchase price.

2. Reduced the financing term and eliminated the seller’s obligation to provide a 20-year loan.

In response to this modification, RIOP Corp., represented by MZLS, filed a petition for certiorari before the Supreme Court, arguing that the Court of Appeals erred in its interpretation of the facts and applicable law.

Supreme Court Decision: Reinstatement of the Original Judgment

The Supreme Court of Puerto Rico granted certiorari, reviewed the case, and fully reinstated the original judgment, concluding that:

• The seller breached its contractual obligation by refusing to complete the sale after RIOP Corp. exercised its purchase option within the agreed timeframe.

• The continued lease payments constituted foreseeable damages, justified under Article 1060 of the Puerto Rico Civil Code, which states that compensable damages include those foreseeable at the time of the contractual relationship.

• The 20-year financing term at a 6% interest rate was an equitable remedy, consistent with the Supreme Court’s jurisprudence on specific performance in purchase agreements (Banco Popular v. Sucesión Talavera, 174 DPR 686 (2008)).

MZLS: Representation in Certiorari and Appeals in Puerto Rico

MZLS continues to establish itself as a leading law firm in high-level litigation, representing clients in contract disputes and certiorari proceedings before the Puerto Rico Supreme Court.

The legal team representing RIOP Corp. in this case included:

• Anthony O. Maceira Zayas– Lead Counsel.

• Crystal N. Acevedo Jiménez – Special Counsel in corporate law, commercial transactions, and contracts.

• Ginnel Torres Adrover – Associate.

For more information about our services or to discuss legal representation, contact us here.

Strengthening MZLS’s Appellate Practice

MZLS’s appellate practice continues to grow with the recent addition of former Associate Justice of the Puerto Rico Supreme Court, Hon. Edgardo Rivera García, who has joined the firm as Special Counsel. With an extensive judicial background and deep knowledge of appeals and judicial review, his addition enhances MZLS’s ability to represent clients in complex disputes before Puerto Rico’s highest courts.

For the Spanish version click here.