Bolton v. Board of County Com'rs of Valencia County
| Decision Date | 15 December 1994 |
| Docket Number | No. 15635,15635 |
| Citation | 119 N.M. 355,1994 NMCA 167,890 P.2d 808 |
| Court | Court of Appeals of New Mexico |
| Parties | Robert H. BOLTON and Meribelle L. Bolton, Plaintiffs-Appellants and Cross-Appellees, v. The BOARD OF COUNTY COMMISSIONERS OF VALENCIA COUNTY, Defendant, Cross-Defendant and Third-Party Plaintiff-Appellee. GELCO FINANCIAL CORPORATION, now known as GE Capital Public Finance, Inc., Defendant, Cross-Claimant and Third-Party Plaintiff-Appellee and Cross-Appellant, v. COMPTON, HICKEY & IVES, P.A. and James C. Compton, Individually, Esquibel, Sanchez & Griego, P.C., and Thomas C. Esquibel, Third-Party Defendants-Appellees, and Cross-Appellants, Alden Capital Markets, Inc., and Leo V. Valdez, Third-Party Defendants-Appellees, Attorney General of the State of New Mexico, Intervenor-Appellee. |
Plaintiffs, Robert H. Bolton and Meribelle L. Bolton (the Boltons), appeal from a judgment denying in part their suit to invalidate the June 1990 $1.8 million dollar bond issue approved by Valencia County (the County). Defendant, GE Capital Finance, Inc. (GE), and third-party Defendants, Compton, Hickey & Ives, P.A. (the Compton Firm), James C. Compton, individually, Esquibel, Sanchez & Griego, P.C. (the Esquibel Firm), and Thomas C. Esquibel, individually, have filed separate cross-appeals.
The Boltons raise numerous issues on appeal which we combine and discuss as follows: (1) whether the district court violated due process by limiting their requests for discovery, granting summary judgment without full discovery, bifurcating trial of the issues, denying their motion to file an amended complaint, and refusing to consider documentary evidence in response to a motion for summary judgment; and (2) whether the district court erred in refusing to invalidate the entire bond issue.
GE's cross-appeal asserts that the district court erred in (1) invalidating a portion of the bond issue for refinancing road building equipment; and (2) not holding that GE was entitled to payment of the bonds it purchased.
Third-party Defendants and Cross-Appellants, the Compton Firm, the Esquibel Firm, and Compton and Esquibel, individually, contend in their cross-appeal that the district court erred in (1) invalidating a portion of the bond issue for refinancing road building equipment; (2) refusing to find that the Boltons' challenge to the validity of the refinancing aspect of the bond issue was time barred; (3) refusing to find that under NMSA 1978, Section 55-8-202 (Repl.Pamp.1987), GE was a good-faith purchaser for value without notice of any bond defect in the event that refinancing of road construction equipment was unauthorized under the 1990 bond issue; and (4) refusing to find that no amount was refinanced.
We affirm in part and reverse in part.
In May 1990 the County, through its board of county commissioners, adopted an ordinance to authorize the issuance of a $1.8 million dollar revenue bond issue. In order to facilitate the issuance of the bond issue, the County hired Compton as its bond counsel. The County also relied upon Esquibel, the county attorney, for advice concerning the issuance and sale of the bonds. On the advice of Compton, the County executed a Trust Indenture and Security Agreement (Trust Indenture) between the County and Ranchers State Bank, as Trustee. The Trust Indenture specified that the bonds issued thereunder were payable only from properly pledged revenues. No voter approval was sought for the issuance of the bonds. The Trust Indenture specifically pledged as sources for the repayment of such bonds monies from thirteen specific sources, together with:
(B) All other income, proceeds and revenues received by the County, except: (1) the proceeds of ad valorem taxes; (2) State of New Mexico appropriations; and (3) the proceeds of any County contracts or grants, whether from or with public, private or governmental sources, which are restricted as to use.
The Trust Indenture further provided:
If the pledge of any one or more sources of income or revenue to the payment of the Bonds shall ever be held by final decision of a court of competent jurisdiction to be invalid or to make the Bonds invalid because of constitutional restrictions on County indebtedness, the income or revenue derived from such source or sources shall not be subject to the pledge herein contained.
As outlined in the ordinance authorizing the bond issue, the bonds were issued for the purposes of:
[ACQUIRING] AND FINANCING ... EQUIPMENT, VEHICLES AND OTHER PERSONAL PROPERTY FOR LAYING OFF, OPENING, CONSTRUCTING, RECONSTRUCTING, RESURFACING, MAINTAINING, REPAIRING, AND OTHERWISE IMPROVING ALLEYS, STREETS, PUBLIC ROADS AND BRIDGES WITHIN [THE] COUNTY....
The bond ordinance did not specifically list any other purposes but did refer to the Trust Indenture which defined "Purposes" to include:
(A) Constructing, purchasing, furnishing, equipping, rehabilitating, making additions and improvements to public buildings;
(B) Laying off, opening, constructing, reconstructing, resurfacing, maintaining, repairing or otherwise improving existing building [sic], alleys, streets and public roads and bridges within the County;
(C) Acquiring, financing and refinancing equipment, vehicles and other personal property for such purposes; and
(D) All purposes incidental to and necessary and appropriate for the foregoing.
Compton, the County's bond counsel, issued an opinion letter to Alden Capital Markets, Inc. (Alden) stating that the bonds were valid obligations of the County. Esquibel also gave a similar opinion letter.
The County issued the bonds on June 14, 1990. Following the issuance of the bonds by the County, they were purchased by Alden, who acted as the bond underwriter. Thereafter, Alden resold the bonds to GE. Alden and its president, Leo V. Valdez, prepared the offering circular in connection with Alden's offer to sell the bonds to GE. After the County issued the bonds and had spent a portion of the bond proceeds, its bond counsel, Compton, advised it to pass a supplemental bond ordinance. The supplemental ordinance had the effect of broadening the purposes of the bond issue, thereby authorizing the County:
[TO PROVIDE] FOR THE CONSTRUCTING, PURCHASING, FURNISHING, EQUIPPING, REHABILITATING AND MAKING ADDITIONS AND IMPROVEMENTS TO PUBLIC BUILDINGS AND FOR THE LAYOFF, OPENING, CONSTRUCTING, RECONSTRUCTING, RESURFACING, MAINTAINING, REPAIRING AND OTHERWISE IMPROVING EXISTING PUBLIC
BUILDINGS, ALLEYS, STREETS, PUBLIC ROADS AND BRIDGES WITHIN VALENCIA COUNTY....
On June 29, 1991, approximately twelve months following the issuance of the bonds, the Boltons filed suit against the County and GE for declaratory judgment, injunction, and equitable relief. They sought a ruling that the bond issue required advance voter approval, that the bonds were issued in violation of state constitutional and statutory provisions, and that the bond issue was void and unenforceable. The Boltons also requested that the court enjoin the County from repaying the bond issue. GE cross-claimed against the County and filed third-party complaints against Alden, Valdez, the Compton Firm, the Esquibel Firm, and Compton and Esquibel, individually, asking reimbursement for any portion of the bond indebtedness which the district court determined to be unenforceable. The County's answer to the cross-claim of GE denied the invalidity of the bond issue and asserted a counterclaim for a declaratory judgment confirming the validity of the bond issue. Thereafter, the County filed a third-party complaint for indemnification against the Compton Firm, and Compton, individually, and a third-party complaint against Alden and Valdez, individually. The Esquibel Firm, Esquibel, individually, and Alden also cross-claimed against the Compton Firm, and Compton, individually.
In November 1991 the Attorney General moved to intervene in the action. The district court granted the motion. The County filed a motion to dismiss the Boltons' complaint. GE filed a motion for summary judgment. GE also filed a second motion for summary judgment seeking to have the district court determine that it was a subsequent purchaser of the bonds, without notice of any defect as to the validity of the bonds. GE, the Compton Firm, Compton, individually, the Esquibel Firm, and Esquibel, individually, filed motions for summary judgment seeking to have the district court determine that the amount of the bond issue found to be not statutorily authorized, i.e., that portion devoted to refinancing, totaled $412,182. The district court granted summary...
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