Corona v. Corona

• Decision Date: 03 April 2014
• Docket Number: No. 32,017.,32,017.
• Citation: 329 P.3d 701
• Parties: Luz CORONA, Plaintiff–Appellee, v. Daniel CORONA and Maria Corona, husband and wife, Samuel Corona and Marciana Corona, husband and wife, and Jose Luis Corona and Marta Corona, husband and wife, Defendants–Appellants.
• Court: Court of Appeals of New Mexico

329 P.3d 701

Luz CORONA, Plaintiff–Appellee,

v.Daniel CORONA and Maria Corona, husband and wife, Samuel Corona and Marciana Corona, husband and wife, and Jose Luis Corona and Marta Corona, husband and wife, Defendants–Appellants.

No. 32,017.

Court of Appeals of New Mexico.

April 3, 2014.

Lilley & O'Connell, P.A., Michael W. Lilley, Jerome O'Connell, E'rin O'Connell, Las Cruces, NM, for Appellee.

Cervantes Law Firm, P.C.Joseph Cervantes, Las Cruces, NM, L. Helen Bennett, Albuquerque, NM, for Appellants.

OPINION

BUSTAMANTE, Judge.

{1}This case involves an effort by a sister to collect a substantial sum of money from her brothers for obligations incurred almost fifteen years ago.Appellee, Luz Corona, allowed the statute of limitations to run on each of these debts.We consider whether payments made well after the expiration of the statute of limitations revived the debts.We conclude that the district court's findings that the payments sufficed to revive all the loans and guaranties are supported as to some of the appellants but not as to others.We therefore reverse in part and affirm in part the district court's determination of revival.

{2}Appellants also make a number of arguments to the effect that, even if the debts and guaranties are enforceable, their liability is limited because the business entity that borrowed the funds is no longer extant or because one brother arranged the loans independently of the others, and the amount owed is limited by the terms of one or more agreements.We affirm the district court as to these arguments.

FACTUAL BACKGROUND

{3} In September 1999Daniel Corona, Jose Luis Corona, and Samuel Corona(the Brothers) together with their wives, Maria Corona, Marciana Corona, and Marta Corona(the Wives)(collectively, Appellants) entered into an arrangement through which Luz provided a “revolving line of credit” to Coronas Concrete Company, Inc.(Coronas Concrete Company), a construction company owned by the Brothers.Luz is the Brothers' sister.The parties executed a promissory note, loan agreement, and security agreement (collectively, the Agreement) to memorialize the arrangement.All of the documents referred to “Coronas Concrete Company, Inc.” as the borrower.The promissory note and loan agreement were signed by Appellants as individual guarantors.Both of these documents specified that the balance of principal and interest owed was to be paid in full by September 30, 2000.Both also provided that the prevailing party would be entitled to reasonable attorney fees and costs in the event of a dispute.Finally, both the promissory note and loan agreement stated that “Coronas Concrete Company, Inc.” could borrow up to seventy thousand dollars and that interest would be charged at a rate of eight percent.The parties agree that, in spite of this language, Appellants requested and Luz agreed to lend monies totaling well over that limit, although they dispute the total amounts lent and paid.

{4} Around the same time, Luz provided approximately $70,000 as a down payment for the purchase of land that was eventually titled in the name of “Coronas Concrete Company, Inc.”The parties did not memorialize the terms of this loan in writing.The parties appear to agree that the loan principal was to be repaid within a year and that interest would accrue at eight percent if the principal was not paid within that time.We refer to this arrangement as the “Land Loan.”

{5} A year later, a $42,000 certificate of deposit owned by Luz was used to cover an unpaid line of credit owed by Coronas Concrete Company.Like the Land Loan, the parties failed to document the terms of this arrangement in writing.We refer to this arrangement as the “CD Loan.”

{6}Coronas Concrete Company borrowed from and repaid Luz in various transactions between 1999 and late 2000.Between September 2000 and November 2008, there were no payments made to Luz by Coronas Concrete Company, its successor companies, or Appellants.In November 2008 Luz received a check for $20,000 issued by Las Cruces Concrete Construction, LLC, one of the successor companies to Coronas Concrete Company owned by the Brothers.Since this payment is at the crux of the district court's findings, we will refer to it as “the $20,000 payment.”Between November 2008 and February 2010 Luz received payments totaling $63,000, including the $20,000 payment.Each of the checks issued to Luz beginning in November 2008 was drawn on an account held by Las Cruces Concrete Construction, LLC, and all the checks after the $20,000 payment indicated that the check was a “payment on loan.”Although the checks were issued by Las Cruces Concrete Construction, LLC, the funds were treated as draws against the profits allocated after taxes to Daniel, Jose Luis, and Samuel Corona.

{7}The district court found that in 2009the parties entered into an oral settlement agreement in which Luz accepted Appellants' offer of $100,000 to be paid in monthly installments of $5,000.This agreement was never memorialized in writing and there was no discussion between the parties as to whether the settlement applied to the Agreement, the Land Loan, the CD Loan, or all three arrangements.Appellants breached the terms of the settlement agreement when they failed to pay $5,000 per month as agreed.

PROCEDURAL BACKGROUND

{8} Luz filed suit in 2010 alleging breach of contract, breach of good faith and fair dealing, and breach of promissory note.Appellants filed a motion for summary judgment, arguing that Luz's claims were barred by the statutes of limitations and, therefore, the terms of the Agreement, Land Loan, and CD Loan were unenforceable.SeeNMSA 1978, § 37–1–3(A)(1975)(limitations period for written contracts is six years);NMSA 1978, § 37–1–4(1880)(limitations period for unwritten contracts is four years).Luz filed a cross-motion for partial summary judgment, arguing that all of the debts were revived pursuant to NMSA 1978, Section 37–1–16(1957).The district court agreed with Luz and ruled that the statutes of limitations did not bar her claims because “[Appellants'] tender of partial payments ... and [their] admissions of liability and willingness to repay [Luz] following the expiration of the applicable statute of limitations, [revived Luz's claims].”Based on this ruling, the district court granted partial summary judgment to Luz and ordered that “because [Appellants'] debt and liability to [Luz] were revived as a matter of law, the sole issue for trial is the amount and extent of [Luz's] damages.”

{9} The matter proceeded to a bench trial.In spite of the district court's ruling on summary judgment, the district court heard evidence on and permitted the parties to litigate the issue of whether the loans were revived.At the conclusion of the trial, the district court made the following findings of fact pertinent to this appeal.

5.The Promissory Note states Defendants specifically waive a right to demand of non-payment in the event the note is not paid at maturity.

6.The Promissory Note states that any delay or omission in the enforcement of the Promissory Note does not affect the liability of Defendants.

....

10.DefendantsSamuel Corona, Jose Luis Corona, Maria Corona, Marta Corona, and Marciana Corona authorized DefendantDaniel Corona to act as their agent with respect to the loan agreement with Luz Corona.

11.Daniel Corona acted as the authorized agent of DefendantsSamuel Corona, Jose Luis Corona, Maria Corona, Marta Corona, and Marciana Corona with respect to Luz Corona's loans and the amounts repaid to Luz Corona.

....

26.Luz Corona's Certificate of Deposit in the amount of $42,000.00 that was used to pay Defendants' Line of Credit was a loan from Luz Corona to Defendants subject to the terms of the Promissory Note.

....

29.The November 2008 payment predates the Settlement Agreement and the parties did not agree as to which debt the payment was to be applied.

30.The $63,000 that was repaid was not directed to any specific loan owed.

31.In 2009, Plaintiff and Defendants entered into a verbal executory accord (a/k/a “settlement agreement”) for the resolution of all monies owed to her by Defendants.

....

33.Defendants defaulted on the settlement agreement by failing to timely tender the $5,000.00 monthly payment.

34.Under New Mexico law[,]Luz Corona, as the non-breaching party, had the ability to elect between either enforcing the executor[y] accord or enforce the terms of the original loan agreement.

35.Luz Corona elected to enforce the original loan agreement and seek repayment of the entire outstanding loan balance, interest and attorney[ ] fees owed by Defendants.

....

40.The monies paid to Luz Corona from Daniel Corona, Jose Luis Corona, and Samuel Corona's subsequent business entities to Luz Corona were in fact payments from Daniel Corona, Samuel Corona, and Jose Luis Corona, individually, in equal shares.

....

42.Defendants admit they currently owe Luz Corona an undetermined amount of money.

{10} Based on these findings, the district court entered the following conclusions of law:

4.Defendants tendered partial payments to Luz Corona on the unpaid balance of her loan between November 2008 and February 2010, and which constituted a revival of their contract with Luz Corona under New Mexico law.In addition, Defendants admitted liability to Plaintiff in depositions, and which also served to revive the loan via a signed writing by signing the checks for partial payments, and which denoted in writing “Payment on Loan[.]”SeeNMSA 1978, Section 37–1–16.

5.Defendants' 2008 payment to Luz Corona revived all of the debts owned by Coronas Concrete Company and Daniel Corona, Samuel Corona, and Jose Luis Corona as guarantors; and, therefore, the statute of limitations has not run on the enforcement of all funds owed by Defendants' to Luz Corona.

6.The $20,000.00 payment in 2008 was a loan payment that applied to all the outstanding debts ...