Dooley v. Quiet Title Co.
| Decision Date | 06 May 2013 |
| Docket Number | NO. 31, 073,c/w 31,072,31, 073 |
| Court | Court of Appeals of New Mexico |
| Parties | CORNELIUS DOOLEY M.D. AND SUSAN HOFFMAN-DOOLEY, Plaintiffs-Appellees, v. QUIET TITLE COMPANY, LLC, A New Mexico Limited Liability Company, and J. MICHAEL HYATT, Individually and as a member of QUIET TITLE COMPANY, LLC, Defendants-Appellants. |
This memorandum opinion was not selected for publication in the New Mexico Appellate Reports. Please see Rule 12-405 NMRA for restrictions on the citation of unpublished memorandum opinions. Please also note that this electronic memorandum opinion may contain computer-generated errors or other deviations from the official paper version filed by the Court of Appeals and does not include the filing date.
APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY
The Simons Firm LLP
Thomas A. Simons IV
Daniel H. Friedman
Kelcey Nichols
Santa Fe, NM
for Appellees
Lorenz Law
Alice Tomlinson Lorenz
Albuquerque, NM
Sommer Udall Sutin Hardwick & Hyatt, PA
Jack N. Hardwick
Kurt A. Sommer
Santa Fe, NM
for Appellants
{1} Quiet Title Co., LLC and J. Michael Hyatt (Defendants) appeal from a jury verdict awarding HDQ, LLC money damages after Defendants failed to close on HDQ's contract for the purchase of three condominium units and instead closed the purchase with Maxmedical. Defendants challenge the jury instructions, HDQ's intentional interference with contract claim, admission of expert testimony, and the amount of the awards for compensatory damages and punitive damages. We affirm.
{2} The original plaintiffs in this suit were HDQ, LLC and its three physician members, Doctors Hoverson, Dooley and Quinn. The cause of action has since been assigned to Dr. and Mrs. Dooley. We refer to all of the above collectively as Plaintiffs for simplicity and consistency throughout the Opinion. The parties are familiar with the facts of the case, but we briefly identify the parties and recount a time line of events to assist in our analysis below.
{3} HDQ's members included Doctors Hoverson, Dooley and Quinn. Quiet Title, the title company and closing agent, consists of co-defendant Michael Hyatt as Manager, its sole member was Trestle Ranch Corporation, and Hyatt is owner of Trestle Ranch Corporation. Maxmedical is owned by Poohbah Corporation, and Poohbah is owned by Hyatt. Selene T. Sinclair was the Trustee of the Selene T. Sinclair Separate Property Trust.
{4} On May 21, 2009, the Selene Sinclair Trust (Seller) contracted with Maxmedical to sell three medical office condominium units for $500,000, with a closing date of June 15, 2009, a Monday. The broker for that deal was Leon Mellow, who was to evenly split a six percent commission with Seller's real estate agent. The Doctors' Park Condominium Owners' Association (DPCOA) reserved a right of first refusal that permitted it to purchase the units on the same terms and conditions of the Maxmedical contract if that right was exercised by June 12, 2009, a Friday. The DPCOA assigned its right to Dr. Hoverson on June 9, and the next day, Dr. Hoverson, as a managing member of HDQ, signed a purchase contract with Seller. Plaintiffs' contract called for the same purchase price and closing date, but rather than allowing for a split commission listed in the Maxmedical contract, Plaintiffs' contract provided a 5.5 percent commission going solely to Seller's real estate agent.
{5} On June 10, 2009, Defendants worked with Seller to prepare closing documents for the sale to Plaintiffs. Because Seller was leaving town that week and would be unreachable until several days after the closing date, Defendants had Seller sign closing documents for the Maxmedical purchase as well, to serve as a backup in case the sale to Plaintiffs could not be executed. The June 15 closing date was considered crucial because Seller was facing imminent foreclosure on the property. As of June 12, 2009, Defendant Hyatt did not think that HDQ had exercised the right of first refusal correctly. When Defendants reviewed Plaintiffs' contract on June 15, Defendants concluded that the non-matching commissions in the two sale contracts resulted in a defective execution of the right of first refusal because the agreement was not on the same terms and conditions as the Maxmedical contract. Defendants also cited flaws in the lending bank's security requirements and in Plaintiffs' attempt to satisfy requirements of the title binder. At no time between June 12 and June 15 did Defendants alert Plaintiffs of any shortcomings. Instead, on June 15, Defendants rejected Plaintiffs' closing bid and closed on the deal between Seller and Maxmedical, informing Plaintiffs of the sale after it was complete. Plaintiffs alleged that Defendants' actions violated a fiduciary duty, as closing agent, to disclose the information that impeded Plaintiffs' sale in favor of a closing overseen by one of Mr.Hyatt's business entity associations (Quiet Title) for a sale to another of Mr. Hyatt's business entity associations (Maxmedical).
{6} Plaintiffs filed this action against Defendants, Maxmedical, and Seller, alleging breach of fiduciary duty, negligence, fraud, intentional interference with contract, breach of contract, and a violation of the New Mexico Unfair Practices Act. Seller was later dropped as a party, and the jury found in favor of Maxmedical on all counts against it. Against Defendants, the district court allowed three claims to go to the jury: (1) negligent failure to disclose problems with Plaintiffs' attempt to exercise its right of first refusal; (2) breach of fiduciary duty for Defendants' failure to disclose those problems; and (3) intentional interference with contract. The jury found in favor of Plaintiffs and awarded $335,107 in compensatory damages and $1.5 million in punitive damages. Defendants filed this appeal.
{7} Defendants raise four main issues, arguing that: (1) the jury instructions failed to explain that Plaintiffs' improperly executed right of first refusal was not an enforceable contract, as a matter of law, and consequently, Plaintiffs could not meet their burden of proof on causation; (2) expert testimony should not have been admitted; (3) evidence was insufficient to allow the jury to determine damages for lostrental income; and (4) the punitive damages award was improper. We take those arguments in turn.1
{8} Defendants first argue that they were denied jury instructions that would have informed the jury that Plaintiffs' contract was marred by terms that were materially different than the original Maxmedical sales contract. To properly exercise a right of first refusal, the DPCOA agreement required Plaintiffs to purchase the property according to the same material terms and conditions as the original contract. Because the court concluded that the failure to provide a commission for Mr. Mellow constituted a material difference, Defendants contend that Plaintiffs' failure to properly execute the right of first refusal meant there was no enforceable contract to purchase the property. Therefore, Defendants argue, Plaintiffs' claim fails as a matter of law because there was no valid contract with which to interfere. Finally, Defendants contend that Seller's unavailability after June 10, 2009 meant that, even if informed of any defects in the contract, Plaintiffs could not have cured those defects and thus cannot now prove a causative link between Defendants' actions and any resulting harm. We address those arguments in order.
{9} Defendants argue that the district court improperly rejected their request for jury instructions that would have told the jury that (1) a real estate broker is entitled to a commission even if the property is sold to a subsequent buyer exercising a right of first refusal and (2) Plaintiffs' failure to include a contractual provision granting a commission to Seller's original broker meant that their contract was not on the same material terms and conditions as the original sales contract. Defendants contend that the denial of the instructions prevented them from presenting their theory of the case to the jury.
{10} "The propriety of jury instructions given or denied is a mixed question of law and fact, and we review factual questions under a substantial evidence standard and we review the application of law to the facts de novo." State v. Soutar, 2012-NMCA-024, ¶ 21, 272 P.3d 154 (alterations, internal quotation marks, and citation omitted). We consider "whether a reasonable juror would have been confused or misdirected by the jury instruction." State v. Cunningham, 2000-NMSC-009, ¶ 14, 128 N.M. 711, 998 P.2d 176 (internal quotation marks and citation omitted).
{11} Defendants requested the following instruction: "The [c]ourt has determined that [Plaintiffs] did not effectively exercise the right of first refusal because the [Plaintiffs'] [c]ontract was not on the same material terms and conditions as theMaxmedical [c]ontract as a matter of law." The district court submitted the following instructions to the jury:
{12} "A party is entitled to have the jury instructed upon all correct legal theories of his case which are pleaded and...
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