The Supreme Court of Puerto Rico has issued a significant ruling regarding the imposition of attorney fees in civil lawsuits. The decision, made on September 4, 2026, clarifies the requirements under Rule 35.1 of the Civil Procedure for awarding attorney fees when a party rejects a settlement offer. This ruling affects parties involved in civil litigation, particularly in insurance claims, as it sets a precedent for how attorney fees can be assessed in future cases.
The case, Consejo De Titulares Del Condominio Villas De Hato Tejas v. Mapfre Praico Insurance Company (CC-2025-0894), arose from a dispute between the condominium association and the insurance company over claims related to damages from Hurricane María. The court's decision is expected to influence how similar cases are handled in the future, particularly regarding the acceptance of settlement offers and the subsequent financial responsibilities of the parties involved.
Background
The parties involved in this case are Consejo de Titulares del Condominio Villas de Hato Tejas (the Council) and Mapfre Praico Insurance Company. The Council filed a lawsuit against Mapfre on September 5, 2019, claiming breach of contract and damages related to the insurance coverage for property damages caused by Hurricane María. The Council sought over $17 million in damages, arguing that Mapfre had conducted a poor investigation and refused to pay the full amount of their claim.
Mapfre countered that it had fulfilled its contractual obligations and that the amount claimed by the Council was excessive. After a lengthy legal process, the lower court ruled in favor of Mapfre, determining that the insurance company owed the Council $869,999.70, significantly less than what the Council had claimed. Following this ruling, Mapfre sought to recover attorney fees and costs, arguing that the Council had rejected a reasonable settlement offer, which led to unnecessary litigation.
The Ruling
The Supreme Court ruled that a determination of “temerity” or arbitrariness is required before imposing attorney fees under Rule 35.1 of the Civil Procedure. The court stated, “we reaffirm the doctrine of judicial precedent or stare decisis in Puerto Rico.” This means that lower courts must consider whether a party acted in bad faith or unreasonably when rejecting a settlement offer before they can impose attorney fees on that party.
The court emphasized that the previous rulings in similar cases had established that the imposition of attorney fees is not automatic upon the rejection of a settlement offer. The ruling clarified that a court must first assess whether the rejection was unreasonable or arbitrary. This decision is significant as it maintains the balance between encouraging settlements and protecting parties who act in good faith.
Impact
This ruling has important implications for future civil litigation in Puerto Rico. It establishes that attorney fees cannot simply be imposed due to the rejection of a settlement offer; courts must evaluate the circumstances surrounding the rejection. This decision may deter parties from pursuing unreasonable claims, as they could face financial penalties if their rejection of a reasonable offer is deemed arbitrary.
The ruling also reinforces the importance of judicial precedent in Puerto Rico, ensuring that lower courts adhere to established legal principles when making decisions about attorney fees. This clarity in the law will likely influence how parties approach settlements and litigation strategies in the future.
What's Next
The case may still be subject to further appeals, as the parties could seek to clarify additional aspects of the ruling or its implications. However, the Supreme Court's decision sets a strong precedent for how attorney fees will be handled in similar cases moving forward.