Bank of Santa Fe v. Marcy Plaza Associates
| Decision Date | 14 December 2001 |
| Docket Number | No. 21,389.,21,389. |
| Citation | 40 P.3d 442,2002 NMCA 14,131 N.M. 537 |
| Court | Court of Appeals of New Mexico |
| Parties | The BANK OF SANTA FE, a New Mexico banking corporation, Trustee of the Walter L. Goodwin, Jr. Trust in the name of Ban San Co., a partnership nominee, Plaintiff-Appellant, v. MARCY PLAZA ASSOCIATES, a New Mexico general partnership, Defendant-Appellee. |
Steven L. Tucker, Tucker Law Firm, P.C., Santa Fe, NM, for Appellant.
John M. Eaves, Derek V. Larson, Eaves, Bardacke, Baugh, Kierst & Kiernan, P.A., Albuquerque, NM, for Appellee.
{1} This case requires us to determine whether, under principles of res judicata, Marcy Plaza Associates' (Marcy Plaza) claim that it overpaid rent is barred by a prior arbitration between the parties. Marcy Plaza is the lessee of property in Santa Fe, on which it operates a retail and office complex. The Bank of Santa Fe (Bank) is the lessor. Under the lease, Marcy Plaza's lease payments are calculated based on its "net profit." In July 1996 the parties arbitrated Marcy Plaza's claim that refinancing costs are deductible costs in determining "net profit" (1996 arbitration).
{2} In October 1996 three months after the 1996 arbitration, Marcy Plaza informed the Bank of its claim that it had overpaid rent by mistakenly including expenses that were passed through to tenants, such as utilities. In September 1997 Marcy Plaza notified the Bank that it intended to seek another arbitration. The Bank brought this declaratory judgment action alleging that Marcy Plaza's overpayment claim was barred by res judicata because Marcy Plaza did not raise it in the 1996 arbitration between the parties. After trial, the district court ruled that Marcy Plaza's claim that it overpaid rent was a different claim, not decided in the 1996 arbitration, and it was not barred by res judicata. We affirm.
{3} The retail and office complex is partially on real estate owned by the Walter Goodwin Trust; the Bank is trustee. As trustee, the Bank entered into two ground leases, one in 1982 and one in 1984. Marcy Plaza now holds the leases. For purposes of this opinion the two leases, which are similar in all material respects, are referred to as "the lease."
{4} The lease provides for base rent, and contains two provisions for increasing the rent over time. The first increase began in year six of the lease:
Beginning with the sixth year of the lease term, the base rent shall be increased by an amount equal to ten percent (10%) of the amount, if any, by which Lessee's gross rental income from all property covered by the lease on the commencement of the year of the term exceeds Lessee's gross rental income from all property covered by the lease on the base date.
{5} The lease also provides for a second increase to occur with the thirteenth year of the lease. It was to equal twenty-five percent of the net profit received by Marcy Plaza as rent from the leased property. Paragraph 4B of the lease defines "net profit," and provides for arbitration by accountants in case of a dispute over net profits:
Net profit means the gross amount received as rent by Lessee, less all bona fide costs, expenses and payments related to operation, management, maintenance, financing, depreciation, assessments and real and personal property taxes.... Any dispute as to net profit shall be resolved by the parties each choosing an accountant, and the two so chosen choosing a third accountant, in the same manner as hereinafter set forth for the selection of arbitrators or appraisers pursuant to the procedures for arbitration....
{6} In addition to the specific arbitration provision for any dispute as to net profit, the lease also contains a general arbitration provision:
Any controversy which shall arise between Lessor and Lessee, ... shall be settled by arbitration. Such arbitration shall be before one disinterested arbitrator if one can be agreed upon, otherwise before three (3) disinterested arbitrators, one named by Lessor, one by Lessee, and one by the two (2) thus chosen.
{7} In 1990, the sixth year of the lease, Marcy Plaza's first supplemental rent payment became due. To calculate the supplemental rent payment, Marcy Plaza had to calculate its "gross rental income." Marcy Plaza did so and beginning in 1990 submitted checks to the Bank.
{8} In April 1996 Marcy Plaza notified the Bank about a proposed refinancing of the Industrial Revenue Bond debt which would increase the indebtedness against the property from approximately $3,300,000 to $4,500,000. In May 1996 the Bank requested arbitration on three issues, including "[w]hether or not the financing cost, including interest on the new loan, are deductible as an expense for calculation of rentals based upon net profits." The two other issues were settled, but the net profit issue went to arbitration before three accountants in July 1996. Ultimately, the panel of accountants decided this issue in favor of Marcy Plaza, ruling that costs associated with the refinancing were a deductible expense in calculating net profits.
{9} In October 1996 and again in September 1997, Marcy Plaza notified the Bank that Marcy Plaza believed it had overpaid rent since 1990. The notification letter in 1997 informed the Bank that Marcy Plaza intended to seek another arbitration. According to Marcy Plaza, the overpayments occurred because it had mistakenly calculated gross rental income to include pass-through expenses such as utilities and other expenses paid by its tenants. The overpayments totaled approximately $34,000 and, at trial, Marcy Plaza admitted the mistake was caused by its own carelessness. In November 1997 the Bank filed this declaratory judgment action seeking to establish that Marcy Plaza was barred by res judicata from pursuing any overpayments. The Bank also alleged that Marcy Plaza was barred from pursuing a claim about payment of costs and expenses associated with the 1996 arbitration. In December 1997 Marcy Plaza sent the Bank a formal demand for arbitration.
{10} After a bench trial, the district court ruled in favor of Marcy Plaza on the overpayment issue. The district court found that the cause of action determined in the 1996 arbitration was different from the cause of action now asserted by Marcy Plaza: "[t]he concept of `gross rental income' was only tangential to the net profit issue presented at the July 19, 1996 Arbitration," and "[t]he calculation of `gross rental income' was not [before] the July 19, 1996 Arbitration." The district court dismissed the Bank's complaint insofar as it requested that Marcy Plaza's overpayment claim was res judicata. Rule 1-041(B) NMRA 2001.
{11} The district court ruled in favor of the Bank regarding payment of costs and expenses related to the 1996 arbitration; the issue was not appealed and is not before us.
{12} We review this issue as a mixed question of law and fact. The facts are reviewed to see if they are supported by substantial evidence, but the legal conclusions flowing from those facts are reviewed de novo. State v. Attaway, 117 N.M. 141, 144-46, 870 P.2d 103, 106-08 (1994); Anaya v. City of Albuquerque, 1996-NMCA-092, ¶ 5, 122 N.M. 326, 924 P.2d 735; Wolford v. Lasater, 1999-NMCA-024, ¶ 4, 126 N.M. 614, 973 P.2d 866 ().
{13} Claim preclusion, or res judicata, precludes a subsequent action involving the same claim or cause of action. Wolford, 1999-NMCA-024, ¶ 5, 126 N.M. 614, 973 P.2d 866. It applies where there is "(1) identity of parties or privies, (2) identity of capacity or character of persons for or against whom the claim is made, (3)[the] same cause of action, and (4)[the] same subject matter." City of Las Vegas v. Oman, 110 N.M. 425, 432, 796 P.2d 1121, 1128 (Ct.App.1990) (quoting Three Rivers Land Co. v. Maddoux, 98 N.M. 690, 694, 652 P.2d 240, 244 (1982), overruled on other grounds by, Universal Life Church v. Coxon, 105 N.M. 57, 58, 728 P.2d 467, 469 (1986)
).
{15} The parties disagree on whether res judicata applies to arbitration awards. Although we recognize that collateral estoppel generally applies to arbitration awards, Rex, Inc. v. Manufactured Hous. Comm. of N.M., 119 N.M. 500, 505, 892 P.2d 947, 952 (1995) we need not decide whether res judicata should apply to arbitration awards. Assuming, but not deciding, that res judicata would apply to an arbitration award, we hold that the requisites necessary to prove res judicata are not present in this case.
{16} In this case, we have the same parties, so the dispositive factors are whether the overpayment claim involves the same cause of action and the same subject matter as that decided at the 1996 arbitration. City of Las Vegas, 110 N.M. at 432, 796 P.2d at 1128. Anaya requires us to determine whether the facts underlying the first and subsequent claim are ...
To continue reading
Request your trial
-
Mayer v. Bernalillo Cnty.
...business understanding or usage." Hartnett v. Papa John's Pizza USA, Inc., 828 F. Supp. 2d at 1285-86 (citing Bank of Santa Fe v. Marcy Plaza Assocs., 2002-NMCA-014, 40 P.3d 44217). Additionally, res judicata bars a claim only where a party had a "full and fair opportunity to litigate issue......
-
Fogelson v. Wallace
...her could have been raised at a previous arbitration proceeding); Bank of Santa Fe v. Marcy Plaza Assocs., 2002-NMCA-014, ¶ 15, 131 N.M. 537, 40 P.3d 442 ("Assuming, but not deciding, that res judicata would apply to an arbitration award[.]"). It appears that the majority general rule is th......
-
Martinez v. Martinez
...understanding or usage." Hartnett v. Papa John's Pizza USA, Inc., 828 F. Supp. 2d at 1285-86 (citing Bank of Santa Fe v. Marcy Plaza Assocs., 2002-NMCA-014, 131 N.M. 537, 40 P.3d 442). Additionally, res judicata bars a claim only where a party had a "full and fair opportunity to litigate is......
-
Martinez v. Martinez
...understanding or usage." Hartnett v. Papa John's Pizza USA, Inc., 828 F. Supp. 2d at 1285-86 (citing Bank of Santa Fe v. Marcy Plaza Assocs., 2002-NMCA-014, 131 N.M. 537, 40 P.3d 442). Additionally, res judicata bars a claim only where a party had a "full and fair opportunity to litigate is......