Puerto Rico Supreme Court Holds that Financial Institutions Cannot be Held Jointly Liable Towards Car Sellers

Aug 2024
Cristina Vázquez

On June 24, 2024, the Supreme Court of Puerto Rico issued an opinion in Otero Rivera v. Bella Retail Group, Inc., et al., 2024 TSPR 70. The case involved a dispute over the resolution of a sales contract of a vehicle suffering from certain irreparable defects from the date of purchase. In short, the Court ruled that codefendant USAA Federal Savings Bank should not be held jointly liable with the seller.

The Supreme Court reasoned that installment purchase and financing agreements create a tripartite relationship between the buyer, the seller and the financial institution, in which the assignment of the conditional sales contract is intended from the time the original purchase and sale is perfected. However, when interpreting Act No. 68 of June 19, 1964, as amended, known as the Ley de Ventas a Plazos y Compañías de Financiamiento, 10 LPRA sec. 731 et seq and Act No. 7 of September 24, 1979, as amended, known as the Ley de Garantías de Vehículos de Motor, 10 LPRA sec. 2051 et seq., as well as the applicable regulations, the Court found that there is no clear legislative intention to establish a bond of solidarity between the seller (transferor) and the financial institution (transferee). Likewise, the Court held that the record lacked any evidence establishing that the relationship between Ortiz Rivera and Flagship was a solidary one. Consequently, under our legal systems’ principle that solidarity is not presumed, USAA could not respond jointly.

Accordingly, the Supreme Court determined that, in cases such as this, each party is responsible for reimbursing their individual amounts, namely: (1) the seller shall return to the consumer any deposit or trade-in monies, if any, and return to the financial institution the money received from the loan; (2) the financial institution shall return to the consumer the monthly payments made for the financing of the vehicle; and (3) the consumer shall return the vehicle to the seller.