Healthy Air Masters, Inc. v. Motopac, Corp
KLCE202400719
| Tribunal De Apelaciones De Pue... | Nov 21, 2024Background
- Healthy Air Masters, Inc. (HAM) alleged a long-standing exclusive distribution arrangement for the product Vital Oxide in Puerto Rico with Vital Technologies, Inc., Vital Solutions, LLC, and The Ecology Works, Inc. (collectively, VS).
- In 2020, HAM discovered Motopac Corp. selling Vital Oxide in Puerto Rico, allegedly supplied directly by VS, prompting claims of tortious interference and damages.
- VS argued that any cause of action under Puerto Rico’s Act 75 (Law 75) was prescribed because the exclusivity agreement was terminated in December 2017, over three years before HAM’s amended complaint in July 2021.
- HAM contended there was ongoing exclusive (or de facto exclusive) distribution conduct by VS, so the prescriptive period should run from later acts of lesscabo (impairment), specifically from 2020.
- The trial court denied summary judgment for VS on the ground that material factual disputes existed, particularly regarding when any impairment or termination of the distribution relationship actually occurred and whether the business conduct supported HAM’s timeline.
- VS sought certiorari, claiming the trial court erred by not granting summary judgment based on prescription.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether HAM’s Act 75 claims are time-barred | The cause of action is timely because exclusive distribution—de jure or de facto—continued until 2020; the prescriptive period runs from then | The claim is prescribed; exclusivity ended in Dec. 2017, so any action filed after Dec. 2020 is untimely | Court agreed that factual disputes exist as to when impairment/termination occurred, thus summary judgment is inappropriate |
| Effect of VS’s 2017 email terminating exclusivity | The parties continued commercial conduct consistent with exclusivity post-2017, so the clock did not start | The 2017 email unambiguously ended exclusivity and triggered prescription | Court held that later conduct may extend or restart the prescriptive period; fact issues remain |
| Whether non-exclusive distributors have Act 75 protection | Yes; even if exclusivity lapsed, impairment of an ongoing (non-exclusive) distribution relationship remains actionable | Only exclusive distributors are protected, and exclusivity ended | Court reaffirmed that Law 75 protects both exclusive and non-exclusive distributors |
| Adequacy of summary judgment procedure and opposing papers | Opposition highlighted material factual disputes with supporting evidence | VS claimed facts were undisputed and formal requirements were met | Court found both parties’ filings substantially complied; merits could be reached, but disputed facts required denial of summary judgment |
Key Cases Cited
- Next Step Medical v. Bromedicon, 190 DPR 474 (P.R. 2014) (discusses policy and application of Act 75; exclusive and non-exclusive distribution relationships are protected)
- Gonzalez Santiago v. Baxter Healthcare, 202 DPR 281 (P.R. 2019) (summary judgment standard in Puerto Rico)
- Warner-Lambert Co. v. Tribunal Superior, 101 DPR 378 (P.R. 1973) (just cause doctrine and termination standards under Act 75)
- Pacheco v. Nat'l W. Life Ins. Co., 122 DPR 55 (P.R. 1988) (statute of limitations under Act 75)