A Puerto Rico court recently ruled on a significant dispute involving Wilson 1350, LLC, and R3 Holdings, LLC against Endeavor Capital PR, LLC. The Tribunal de Apelaciones de Puerto Rico dismissed the case due to a lack of jurisdiction. This ruling affects the parties involved and highlights important issues regarding the regulatory powers of financial institutions in Puerto Rico.
The case, identified as TA2026RA00245, began when Wilson 1350 and R3 Holdings filed a complaint against Endeavor Capital on March 6, 2026. They alleged that Endeavor Capital engaged in prohibited practices by granting mortgage loans without the necessary licenses. This complaint was submitted to the Oficina del Comisionado de Instituciones Financieras (OCIF), the regulatory body overseeing financial institutions in Puerto Rico.
On March 31, 2026, the OCIF determined that it lacked jurisdiction to address the complaint. According to the OCIF, the loans in question were for commercial purposes, which fell outside its regulatory scope that primarily covers consumer transactions. Following this decision, the plaintiffs sought a reconsideration from the OCIF, asserting that the agency did have jurisdiction over the matter. However, the OCIF rejected this request.
Unhappy with the OCIF's decision, Wilson 1350 and R3 Holdings appealed to the Tribunal de Apelaciones on May 12, 2026. They argued that the OCIF had erred by not considering the absence of a financial intermediary license when issuing loans to them. They believed that the OCIF should have had jurisdiction over the case since it involved mortgage lending practices.
The court, led by Judge Álvarez Esnard, reviewed the appeal and ultimately dismissed it. The court ruled that it could not assume jurisdiction because the OCIF had failed to notify Endeavor Capital of the initial complaint. The ruling stated, "the decision administrative recurrida by the parte peticionaria was issued in a procedure adjudicative where the adverse parties were the parte peticionaria and Endeavor Capital PR, LLC. However, the OCIF did not notify Endeavor Capital as the complaint was dismissed for lack of jurisdiction before such notification could occur."
This ruling emphasizes the importance of proper notification in administrative procedures. The court noted that without adequate notification, the due process rights of the parties involved were compromised. The court stated, "the notification defect of an agency decision deprives the reviewing forum of jurisdiction to understand the disputed matter and prevents the appeal period from beginning, which affects the due process of the affected party."
The impact of this ruling extends beyond the immediate parties involved. It underscores the need for financial institutions to adhere to regulatory requirements and for regulatory bodies to ensure proper notification procedures are followed. This case sets a precedent regarding the jurisdictional authority of the OCIF and the importance of due process in administrative proceedings.
Going forward, the dismissal of this case does not prevent Wilson 1350 and R3 Holdings from potentially re-filing their complaint if they can address the notification issues identified by the court. The ruling also raises questions about the regulatory framework governing financial institutions in Puerto Rico and whether further clarifications or reforms may be needed.
As of now, it remains unclear if Wilson 1350 and R3 Holdings will pursue further legal action or if they will seek to resolve the underlying issues with Endeavor Capital through other means. The court's decision highlights the complexities of financial regulation and the importance of following proper procedures in legal disputes.