Concerned Residents of S.F. v. Santa Fe

• Decision Date: 06 February 2008
• Docket Number: No. 26,428.,26,428.
• Citation: 182 P.3d 794,2008 NMCA 042
• Parties: CONCERNED RESIDENTS OF SANTA FE NORTH, INC., Plaintiff-Appellee/Cross-Appellant, v. SANTA FE ESTATES, INC., Defendant-Appellant/Cross-Appellee, and The City of Santa Fe and Thornburg Companies, Defendants.
• Court: Court of Appeals of New Mexico

182 P.3d 794

2008 NMCA 042

CONCERNED RESIDENTS OF SANTA FE NORTH, INC., Plaintiff-Appellee/Cross-Appellant, v. SANTA FE ESTATES, INC., Defendant-Appellant/Cross-Appellee, and The City of Santa Fe and Thornburg Companies, Defendants.

No. 26,428.

Court of Appeals of New Mexico.

February 6, 2008.

VanAmberg, Rogers, Yepa & Abeita, LLP, Ronald J. VanAmberg, Santa Fe, NM, for Appellee.

Holland & Hart LLP, Mark F. Sheridan, Kristina Martinez, Santa Fe, NM, for Appellant.

OPINION

SUTIN, Chief Judge.

{1} The parties in this real estate development dispute are Concerned Residents of Santa Fe North, Inc. (Residents), Santa Fe Estates, Inc. (Estates), the City of Santa Fe (the City), and Thornburg Companies (Thornburg).

OVERVIEW

{2} A 1996 settlement agreement resolved an action filed in 1996 (the 1996 action) by Residents against the City and Estates to resolve issues relating to a 1995 master plan and relating to Estates' property. When the City Council ratified a 1996 master plan incorporating elements of the settlement agreement, Residents stipulated to a dismissal of the 1996 action.

{3} In 2003 Thornburg, under contract with Estates to purchase and develop Estates' property for an office complex, filed an application for the development of a proposed commercial area of Estates' property (the Thornburg plan). The Thornburg plan was reviewed and approved by the City Planning Commission. Residents, who opposed the Thornburg plan, appealed this decision of the Planning Commission to the City Council, and in early 2004 the City Council approved the Thornburg plan. Asserting that the Thornburg plan and the City's approval of the plan violated the settlement agreement and the 1996 master plan, Residents in early 2004 filed a district court action against Thornburg, Estates, and the City (collectively, Defendants) alleging breach of the settlement agreement and seeking declaratory and injunctive relief. We will refer to this action as "the contract action."

{4} Also in early 2004, soon after filing the contract action, Residents filed four additional district court actions, each an administrative appeal filed pursuant to Rule 1-074 NMRA, to overturn unfavorable decisions of the City Planning Commission and the City Council. The district court judge who heard and decided the contract action was not the same judge who entered the final order deciding the administrative appeals. The four administrative appeals were consolidated, after which, on October 18, 2004, in a memorandum opinion, and on November 3, 2004, in a final order and judgment, the court resolved the appeals and affirmed the City Planning Commission's decision favoring the Thornburg plan. We will refer to these consolidated administrative appeals as "the administrative appeals."

{5} Defendants in the contract action filed motions for summary judgment in April 2005. The district court dismissed Residents' claims against the City and Thornburg on grounds not pertinent to the appeals now before this Court. The court denied Estates' summary judgment motions, which were based on res judicata and contract interpretation.

{6} Afterwards, the contract action was tried. Among other determinations in its final judgment, the district court held that certain design and development restrictions in the parties' settlement agreement created enforceable contractual rights or restrictions in favor of Residents regarding the commercial property. The court also declared that Residents had a "right to enforce the creation and recordation of the restrictive covenants against [Estates'] Commercial Property." In addition, the court denied Estates' affirmative defense of res judicata. It is from this final judgment that Estates appeals and Residents cross-appeals. We affirm.

BACKGROUND

{7} In connection with the 1996 action, the City, Estates, and Residents engaged in negotiations as to changes to be made in the 1995 master plan. As part of the negotiations, on June 10, 1996, Residents' attorney, Michael Gross, wrote to the City's attorney summarizing the major points Residents sought in a possible settlement of the 1996 action in regard to the commercial property owned by Estates. The letter stated, among other things, "[Residents] also request that the master plan specify the types of businesses, uses, hours of operation, signing and lighting that are to be permitted so that they will be limited and of low-impact." The City's staff thereafter indicated their proposed changes in a document dated July 17, 1996, which referred to and discussed "neighborhood commercial use tracts." The parties refer to these proposed changes as the City's master plan conditions.

{8} On July 18, 1996, Gross wrote to the attorneys for the City and Estates stating major concerns. Gross pointed out that the commercial area was to be "four acres or less and ... encompass uses which are appropriate for the area and in keeping with present City ordinances." In his September 5, 1996, letter, Estates' representative Bruce Geiss referred to various meetings of the interested parties that had occurred, addressed Residents' concerns and the City's master plan conditions relating to the commercial area, and identified the changes in the 1995 master plan that Estates was willing to accept (the Geiss letter). Among Residents' issues that Geiss addressed were "Use and Design Restrictions on the Commercial Area." Attached to the Geiss letter was a "Vision Statement" developed by Estates at Residents' request, which proposed specific use and design concepts for the commercial area, and which, Estates stated, "shall serve as the basis for the ultimate design of the commercial area."

{9} The vision statement stated Estates' intent "to provide an economically viable, socially lively, pedestrian based commercial district." Estates "visualized ... a small scale, neighborhood commercial district, with design covenants dictating buildings which are compatible with nearby residential structures and limited to two story heights," in which "[l]arge scale retail users, such as Wal-Mart, Price Club and Smith's Superstores, will not be permitted." The statement also established that "[d]esign standards and covenants will limit commercial development to the New-Old Santa Fe Pueblo or Spanish style of architecture." Further, it stated that "[d]esign covenants will also limit signage to similar styles and all lighting shall be shielded and spill controlled." Interspersed throughout the vision statement were several less specific uses and designs that Estates "anticipated" for the commercial area. Finally, the vision statement concluded with the statement that "[t]he actual development plan for the Village Center will be submitted to a review process that will require approval of the Santa Fe Planning Commission which provides for public review and comments by all interested parties."

{10} A September 10, 1996, letter from Gross to Estates' attorney and the City's attorney (the Gross letter) stated that, with certain changes and clarifications, the Geiss letter, which modified the City's master plan conditions, was "accepted by each of the parties." The Gross letter attached the City's master plan conditions and the Geiss letter, incorporating these documents as part of the settlement agreement. The Geiss and Gross letters and attached documents formed the parties' settlement agreement. The City approved the settlement agreement and adopted the 1996 master plan, which amended and modified the 1995 master plan. Based on the settlement agreement, which included the vision statement, the parties stipulated to the dismissal of the 1996 action.

{11} In 2003 Thornburg presented the Thornburg plan to the City Planning Commission for approval. The City administrative proceedings resulted in approval by the City of the Thornburg plan. In early 2004, Residents filed its contract action first, followed by its administrative appeals to the district court. The thrust of both the administrative appeals and the contract action was to defeat the Thornburg plan because, according to Residents, the plan violated the settlement agreement in that it lacked use and design restrictions that were required pursuant to the settlement agreement. The district court which entertained the administrative appeals decided the appeals against Residents and affirmed the City's approval of the Thornburg plan. Residents did not appeal from this unfavorable judgment. The district court handling the contract action denied Estates' motions for summary judgment (res judicata and contract interpretation) and after a bench trial decided the issues, for the most part, in favor of Residents.

{12} In the contract action, the district court's conclusions of law established enforceable contractual rights and restrictions in favor of Residents. The court based its conclusions on its finding that the settlement agreement was ambiguous and its interpretation of that ambiguity such that the settlement agreement created enforceable contract rights with "binding and continuing restrictions upon the future development" of the commercial property. These restrictions included restrictions on building height, exclusion of large scale retail users, limitations on the style of architecture for buildings and signage, and a requirement for shielded and spill-controlled lighting. In addition, the court found that the foregoing four restrictions "must be placed as permanent restrictions" by Estates as soon as legal lots or parcels of record are established.

{13} In its conclusions of law, the court reiterated the four "binding and continuing restrictions upon the future development" that it enumerated in its findings of fact number 25. In addition, the court stated that Estates' "continuing contractual obligation to create and record the restrictions against the Commercial Property ... are enforceable obligations under the [settlement agreement]." In its final judgment in...