PPS sues Tallaboa PR for $50M+ over asphalt contract dispute
Petroleum Products Supply LLC (PPS) is seeking more than $50 million in damages in a federal lawsuit against Tallaboa PR LLC, alleging the company diverted $26 million in payments owed under an exclusive asphalt supply contract and engaged in a scheme that inflicted millions in additional losses.
The complaint, filed Sept. 2 in the U.S. District Court for the District of Puerto Rico, says PPS supplied bituminous products, including liquid asphalt, under an exclusive agreement signed in 2015 with a buyer that provides road paving services.
PPS says it consistently honored the contract, offering competitive prices and favorable terms in exchange for exclusivity.
According to the lawsuit, by the end of 2023 the buyer owed PPS more than $26 million for asphalt delivered and received. Instead of paying, PPS claims the funds were “secretly diverted” to Tallaboa PR, which operates the Tallaboa Industrial Terminal in Peñuelas.
The company alleges that Tallaboa PR and its members conspired with the buyer to undermine the contract, supplying asphalt directly and using diverted money to finance the acquisition of the terminal, fund operations and poach PPS customers.
“Defendant, Tallaboa PR, itself and through its members, conspired and collaborated with the exclusive contract buyer, the buyer’s insider individuals, and others, to violate the supply contract’s exclusivity obligation,” the filing states.
PPS claims total damages of $31.8 million in unpaid deliveries, at least $18 million in lost profits and surcharges, and $6.4 million in lost business from customers. It also alleges that East West Bank canceled an $11 million line of credit after learning the contract would not be renewed, costing PPS more than $573,000.
The lawsuit seeks punitive damages under Puerto Rico’s civil code, which could double compensation if a jury determines the defendants acted deceitfully. “Plaintiff PPS requests … that compensation awarded for damages be doubled,” the complaint notes.
The case names Tallaboa PR, other corporate and individual defendants, and several insurance companies believed to have issued liability policies. PPS has demanded a jury trial and is requesting judgment for all damages, plus interest, attorney fees and costs.
“Defendant Tallaboa PR has benefitted from the Buyer’s failure to comply with its payment obligations to PPS and used the diverted funds to acquire asphalt for sale to the Buyer, to a major customer of PPS, and to other customers of PPS,” the company alleged.
The case has been assigned to U.S. District Court Judge Aida M. Delgado-Colón.
