Jm Advisory Group, LLC. v. Municipio De Rio Grande
KLAN202500204
| Tribunal De Apelaciones De Pue... | May 8, 2025Background
- JM Advisory Group, LLC (founded by ex-alcalde Jorge L. Márquez Pérez) sued the Municipality of Río Grande for breach of contract and payment of $297,353.77 for debt collection services under a contract executed in October 2021 and later amended.
- The Municipality counterclaimed, arguing the contract was void due to violations of Puerto Rico’s Law of Governmental Ethics (Art. 4.6), as Márquez was restricted from contracting or benefiting municipal entities for two years after his public service.
- Márquez had previously consulted the Office of Governmental Ethics (OEG), which advised he could not associate with public entities like CRIM (Center for Municipal Income Collection) for two years after leaving office.
- The lower court found the Ethics Law prohibition applicable, deemed the contract void, and ordered JM Advisory to reimburse the Municipality any funds paid.
- JM appealed, arguing the Ethics restriction did not apply since the services were for a different municipality and not CRIM, and challenged the summary judgment in favor of the Municipality.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Nullity of contract under Ethics Law | Márquez did not serve the Municipality of Río Grande or contract with CRIM directly; law doesn’t apply | The contract was signed and performed within the prohibited period outlined in Art. 4.6, rendering it void | Contract is void under Art. 4.6; services breached ethics law |
| Scope of Ethics Law (to which agency prohibition applies) | Restriction applies only to the agency served (Maunabo or CRIM), not Río Grande | Prohibition applies broadly to any municipal entity for which controversial services are rendered | Law applies to all municipalities regarding prohibited services |
| Return of funds paid on void contract | Services were rendered in good faith and benefitted defendant | Void contract requires restitution under Puerto Rico law | JM must reimburse all amounts received |
| Entitlement to summary judgment | Facts and law, as presented, do not clearly establish contract nullity | No material facts in dispute; legal prohibition clear and undisputed | Summary judgment for the Municipality affirmed |
Key Cases Cited
- Vicar Builders v. ELA et al., 192 DPR 256 (2015) (public contract compliance with law is prerequisite to enforceability; void if otherwise)
- Johnson & Johnson v. Mun. de San de Juan, 172 DPR 840 (2007) (purpose of regulating public contract law is protection of fiscal resources)
- Rodríguez Ramos et al. v. ELA et al., 190 DPR 448 (2014) (private parties must ensure public contract legality; contracts violating law are void)
- Quest Diagnostics v. Mun. San Juan, 175 DPR 994 (2009) (risk for illegal government contracting borne by private contractor)
- Banco Popular de Puerto Rico v. Cable Media of Puerto Rico, Inc. y otro, 2025 TSPR 1 (2025) (summary judgment standards in Puerto Rican civil procedure)