Garcia v. Jeantette

• Decision Date: 23 September 2003
• Docket Number: No. 22,784.,22,784.
• Citation: 134 N.M. 776,82 P.3d 947,2004 NMCA 4
• Parties: Fidel GARCIA, Intervenor-Appellant, v. Mario JEANTETTE, Petitioner-Appellee.
• Court: Court of Appeals of New Mexico

82 P.3d 947

134 N.M. 776

2004 NMCA 4

Fidel GARCIA, Intervenor-Appellant, v. Mario JEANTETTE, Petitioner-Appellee.

No. 22,784.

Court of Appeals of New Mexico.

September 23, 2003.

Samuel M. Herrera, The Herrera Firm, P.C., Taos, NM, for Appellant.

Brigitte Ursula Lotze, Jerry J. Hamilton, Brigitte Lotze Law Firm, Taos, NM, for Appellee.

OPINION

WECHSLER, Chief Judge.

{1} We address in this appeal whether the district court had authority under NMSA 1978, § 40-4-7(A) (1997), to order an intervening third party to pay attorney fees incurred by a divorcing party who was required to bring a separate action to collect on a judgment entered in the divorce proceeding. We hold that Section 40-4-7 does not authorize an award of attorney fees under these circumstances. We also decline to uphold the district court's judgment as an award of sanctions against the third party under its inherent authority. We therefore reverse the award of attorney fees.

Background

{2} During their marriage, Petitioner Susan Rita Jeantette (Wife) and Respondent Mario Jeantette (Husband) owned a house in Taos, New Mexico, on land historically belonging to Wife's family. Wife's parents, Fidel and Eva Garcia, had given the land to Husband and Wife as a gift. The property was part of the family compound on which Fidel and other relatives lived. When Husband and Wife built their house on the property, they obtained mortgage loans from First State Bank and Peoples Bank to finance the construction. Fidel assisted in building the house and also co-signed the mortgage in favor of First State Bank. On March 21, 1994, after ten years of marriage, Wife filed for divorce from Husband in Taos County District Court. While the divorce proceeding was pending, Husband and Wife defaulted on their mortgage payments to First State Bank and Peoples Bank. Consequently, on February 8, 1995, First State Bank filed a foreclosure action against Husband, Wife, and Fidel in Taos County District Court. Peoples Bank later joined the action and filed a cross-complaint against Husband and Wife to foreclose on the mortgage it held against the property.

{3} On July 5, 1995, First State Bank obtained judgments of foreclosure against Husband, Wife, and Fidel. Meanwhile, neighbors made an offer to purchase the subject property for $115,000, and the district court ordered a sale of the property to avoid a foreclosure sale. However, before this sale could be consummated, Fidel, apparently in an effort to thwart the sale and keep the property, purchased the judgments in favor of First State Bank and the note and mortgage held by Peoples Bank, thereby terminating the banks' interests in the foreclosure action. On August 23, 1995, the district court entered an order consolidating the foreclosure action with the domestic relations action, thus allowing Fidel to intervene in the divorce proceeding as a third-party respondent.

{4} On December 16, 1996, after two-and-a-half years of bitter litigation over the subject property and other issues, the district court entered a final judgment, decree and order, dissolving the marriage, dividing the community assets and debts, determining the custody and support of the two minor children, and ordering Husband and Wife to seek counseling for anger management, domestic violence, and parenting. The district court also determined the parties' rights and interests in the foreclosed property. It awarded ownership of the residence to Fidel and Wife, but ordered them to pay Husband his community share of the equity in the property. In reaching this decision, the district court found that Fidel and Wife had willfully evaded its order that the property be sold by blocking access to the property, harassing potential buyers, and otherwise making it difficult to show the house. It also found that Fidel "engaged in his own manipulations" to keep the house within the family, rescue his daughter from debt, and leave Husband "penniless." Finally, it found that Fidel's actions in the foreclosure proceeding were designed to divest Husband of his interest in the equity in the house.

{5} Consequently, the district court imposed a judgment lien on the subject property for $23,600, the net value of Husband's equity interest in the property. It also imposed other judgment liens on the property for rent and Wife's share of community debts. On October 21, 1997, after further proceedings to clarify and correct its findings, the district court entered an order modifying the final judgment, decree and order. Fidel sought to appeal the district court's division of the foreclosed property, but this Court, in a memorandum opinion, declined to reach the foreclosure issues on the ground that they were not timely appealed.

{6} On December 29, 1999, Husband filed a separate action against Wife and Fidel in Taos County District Court to foreclose on the judgment liens entered in the divorce case. On October 27, 2000, the district court granted partial summary judgment in favor of Husband on his claims against Wife and Fidel for his share of the equity in the house and against Wife for a hospital debt. Husband withdrew his rental value claim and the district court denied his other claims. To avoid a foreclosure sale of the property, Fidel elected to pay the judgment in favor of Husband for his share of the equity in the house and the hospital debt.

{7} In collecting on the judgments from the divorce action, Husband incurred attorney fees of $9553.31, which were to be paid to his attorney under a contingency fee agreement. Although Husband waived his request for attorney fees in the foreclosure action, he later filed a motion in the divorce action seeking to recover his attorney fees incurred in the foreclosure action pursuant to Section 40-4-7(A).

{8} Fidel did not timely respond to Husband's motion for attorney fees. Although he was granted several extensions of time within which to respond to the motion, he did not file a response until June 29, 2001, fourteen days after the last extension deadline had expired. Thus, on June 26, 2001, the district court entered a judgment for attorney fees in favor of Husband pursuant to Rule 1-007.1 NMRA 2003. The judgment held Fidel and Wife "jointly and severally" liable for Husband's attorney fees in the amount of $9553.31 plus post-judgment interest.

{9} On August 2, 2001, Fidel filed a motion to set aside the judgment for attorney fees on the ground that he did not receive proper notice of the entry of the judgment under Rule 1-055 NMRA 2003. Following a hearing, the district court entered an order refusing to set aside the judgment for attorney fees. Fidel appeals from the denial of the motion to set aside the judgment, attacking the underlying award of attorney fees against him. Wife does not contest the judgment for attorney fees or the denial of the motion to set aside the judgment; she is not a party to this appeal.

Preservation

{10} Fidel argues that the district court erred in awarding attorney fees against him because Section 40-4-7(A) does not provide a basis for awarding fees against an intervening third party who is not a party to the divorce. Husband, however, contends that Fidel waived this argument by filing an untimely response to the motion for attorney fees and by not further challenging the district court's authority to award fees against him in his motion to set aside the judgment or at the hearing on the motion to set aside.

{11} Fidel's response to the motion of attorney fees specifically challenged the authority of the district court to award attorney fees against Fidel under Section 40-4-7, asserting that Husband's reliance on the domestic relations statute "perverts the purpose" of the statute. However, as Husband contends, the response was not timely filed. Because the response was not timely filed, the district court entered a judgment for attorney fees against Fidel pursuant to Rule 1-007.1. Fidel later moved to set aside the judgment, arguing that he was not given proper notice of the entry of the judgment under Rule 1-055.

{12} Our review of the transcript of the hearing on the motion to set aside the judgment indicates that at the hearing, the district court allowed the attorneys for the parties to fully reargue the grounds for, and the defenses to, the motion for attorney fees. Besides arguing that the judgment was entered without notice to him, Fidel argued that "the domestic statute" should not apply to him and that the issue of fees should have been litigated in the foreclosure action, not the divorce action. He further argued that Husband "waived attorney fees" by declining to request them in the foreclosure action. Finally, he argued that Husband was not entitled to attorney fees on the basis of equity. In response, Husband's counsel reargued the grounds of his motion, recounting the procedural history of the case. After questioning counsel during their respective arguments, the district court ruled on the merits of the motion for attorney fees, determining that fees were justified on the ground that the foreclosure action arose from issues in the divorce action.

{13} Although a reviewing court generally will not review a claim of error unless the appellant timely objected below, it will do so when the trial court addressed the untimely objection on the merits. See State v. Diaz, 100 N.M. 210, 212, 668 P.2d 326, 328 (Ct.App. 1983). In this case, when the district court considered the arguments in Fidel's untimely response, and Husband had an opportunity to respond to the arguments at the hearing on the motion to set aside the judgment. As a result, Fidel's arguments on appeal were properly preserved. See DeFillippo v. Neil, 2002-NMCA-085, ¶ 12, 132 N.M. 529, 51 P.3d 1183 (stating that the primary purposes of the preservation rule are to alert the trial court to the potential error so the court has an opportunity to avoid mistakes and to give opposing parties a fair opportunity to...