GCM, Inc. v. Kentucky Cent. Life Ins. Co.

• Decision Date: 29 September 1997
• Docket Number: No. 23978,23978
• Citation: 124 N.M. 186,1997 NMSC 52,947 P.2d 143
• Parties: GCM, INC., a New Mexico Corporation, Claimant-Petitioner, v. KENTUCKY CENTRAL LIFE INSURANCE COMPANY and Donald M. Stephens, Liquidator for Kentucky Central Life Insurance Company, Respondents-Respondents.
• Court: New Mexico Supreme Court

Page 143

947 P.2d 143

124 N.M. 186

GCM, INC., a New Mexico Corporation, Claimant-Petitioner, v. KENTUCKY CENTRAL LIFE INSURANCE COMPANY and Donald M Stephens, Liquidator for Kentucky Central Life Insurance Company, Respondents-Respondents.

No. 23978.

Supreme Court of New Mexico.

Sept. 29, 1997.

Messina, Madrid & Smith, P.A., Glenn R. Smith, Albuquerque, for Claimant-Petitioner.

Sutin, Thayer & Browne, Norman Thayer, Albuquerque, for Respondents-Respondents.

OPINION

MINZNER, Justice.

¶1 GCM, Inc. appeals from a decision of the Court of Appeals affirming the district court's summary judgment for Kentucky Central Life Insurance Company and its liquidator, Donald M. Stephens. The Court of Appeals decided this case by memorandum opinion. GCM, Inc. v. Kentucky Central Life Ins. Co., NMCA No. 16,849, slip op. (filed Oct. 1, 1996). We affirm the grant of summary judgment and the order denying GCM's motion for reconsideration.

I. STATEMENT OF THE FACTS

¶2 GCM is a joint venturer in Guadalupe Plaza Joint Venture (the Joint Venture), which is itself a limited partner in Guadalupe Plaza Limited Partnership (the Limited Partnership). Ron Brown is both a co-joint venturer in the Joint Venture and the principal of the general partner in the Limited Partnership. Kentucky Central is a lender of the Limited Partnership.

¶3 The Joint Venture contributed real property to the Limited Partnership as capital, retaining a priority claim in the first $1.7 million obtained through any sale or transfer of the property by the Limited Partnership. GCM owned a 50% interest in the Joint Venture and, therefore, in the priority claim.

¶4 The Limited Partnership, with Ron Brown acting as general partner, obtained a $5.8 million construction loan from Kentucky Central in return for a $5.8 million promissory note secured by a mortgage on the real property and the personal guarantee of Ron Brown. In the proceedings below, GCM alleged that Kentucky Central pressured the Limited Partnership to expand in such a way as to create an undue financial burden on the Limited Partnership and a resulting inability to meet its obligations under the construction loan.

¶5 In attempting a workout of the debt, GCM informed Kentucky Central of its interest in the real property. In the negotiations, Kentucky Central suggested that the Limited Partnership transfer the property to Kentucky Central, and in return, Kentucky Central would grant GCM an option to purchase the property. Instead, Brown, on behalf of the general partner of the Limited Partnership, deeded the property to Kentucky Central and released Kentucky Central from potential lender liability claims in exchange for a release of his personal guarantee. Neither party has asserted that the Limited Partnership has been dissolved.

II. PROCEEDINGS BELOW

¶6 GCM filed this claim against Kentucky Central in the district court for intentionally causing Ron Brown to breach a fiduciary duty owed to GCM. GCM alleged that Brown's transfer of the property and release of claims constituted a breach of his fiduciary duty to GCM and the Joint Venture. GCM further alleged that Kentucky Central intentionally induced Brown to violate his duty to GCM with knowledge that GCM would be harmed. GCM requested as relief for this claim a rescission of the agreement to deed the property to Kentucky Central and an equitable lien on the real property in favor of GCM.

¶7 The district court granted summary judgment in favor of Kentucky Central and denied GCM's motion for reconsideration. Both the district court and the Court of Appeals found that Ron Brown did not owe a fiduciary duty to GCM directly in his dealings with Kentucky Central, and therefore, GCM could not pursue an action belonging to the Limited Partnership. The Court of Appeals suggested that a direct relationship should exist between the injured party and the tortfeasor in order to state a claim for intentionally inducing another to breach a fiduciary duty. In its motion for reconsideration, GCM attached a purported assignment of rights from the Joint Venture to GCM. In denying the motion, the district court did not refer to the assignment. The Court of Appeals found that the assignment did not properly assign the Joint Venture's claims to GCM. We granted certiorari to examine both the tort of aiding and abetting a breach of fiduciary duty in a partnership context and the denial of the motion for reconsideration.

¶8 GCM contends that there need not be a direct relationship between an injured party and a third party inducing the breach of fiduciary duty. We agree. Further, GCM contends that because Brown breached a duty owed to GCM at Kentucky Central's urging and with Kentucky Central's knowledge, it has sufficiently stated a claim for which relief can be granted. For the reasons that follow, we agree with the district court and the Court of Appeals that the scope of any duty Brown may have owed to GCM did not reach the dealings of the Limited Partnership with Kentucky Central. In addition, GCM argues that the Court of Appeals incorrectly interpreted the assignment. We need not address the Court of Appeals' interpretation of the assignment because we conclude that the trial judge did not abuse his discretion in denying the motion for reconsideration.

III. STANDARD OF REVIEW

¶9 Under Rule 1-012(B) NMRA 1997, if "matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 1-056...." A similar direction is contained in Rule 1-012(C) NMRA 1997, for motions for judgment on the pleadings. In its motion, Kentucky Central specifically requested "summary judgment pursuant to Rule 1-056." In addition, Kentucky Central attached exhibits to its motion and stated that summary judgment was the proper procedure "because the motion relies on materials outside the pleadings." GCM disputed this characterization and stated that Kentucky Central's motion was filed in response to the trial judge's direction to file a motion to dismiss. Nonetheless, GCM attached an affidavit to its Response Brief in support of its allegations. Finally, the district court granted "summary judgment."

¶10 On appeal, the Court of Appeals determined that a Rule 1-012(B)(6) standard was actually applied in the case below and reviewed the decision accordingly. Compare Gonzales v. Allstate Ins. Co., 1996 NMSC 041, 122 N.M. 137, 139, 921 P.2d 944, 946 (stating that on review of a grant of summary judgment pursuant to Rule 1-056, an appellate court "must determine whether the moving party has demonstrated that there is no genuine issue of material fact and is therefore entitled to a judgment as a matter of law"), with Garcia v. Rodey, Dickason, Sloan, Akin & Robb, P.A., 106 N.M. 757, 760, 750 P.2d 118, 121 (1988) (reviewing a dismissal for failure to state a claim upon which relief can be granted pursuant to Rule 1-012(B)(6), and stating that a court must "accept as true all facts well pleaded and question only whether the plaintiffs might prevail under any state of facts provable under the claim"). We disagree.

¶11 Kentucky Central moved for summary judgment, and the district court granted the motion. Because exhibits and affidavits, matters outside the pleadings, were presented to the court and not excluded for purposes of the motion, the proper standard of review is under Rule 1-056 for summary judgment. Peck v. Title USA Ins. Corp., 108 N.M. 30, 32, 766 P.2d 290, 292 (1988) (finding a motion to dismiss to be a motion for summary judgment based on the presentation to the court of matters outside the pleadings).

¶12 Nevertheless, the specific posture in which Kentucky Central filed its motion requires this Court, in reviewing the grant of summary judgment, to determine whether GCM has alleged sufficient facts to support a legally cognizable claim. In its reply brief on the motion for summary judgment, Kentucky Central stated, "The material facts, as alleged in GCM's claim, are admitted for purposes of the motion (only), and are not in dispute. The question is whether GCM has stated a claim, if the facts of the petition are accepted as true."

¶13 When a party "actually admit[s], for purposes of the summary judgment motion, the veracity of the allegations in the complaint," a reviewing court should "consider the facts pleaded as undisputed and determine if a basis is present to decide the issues as a matter of law." Matkins v. Zero Refrigerated Lines, Inc., 93 N.M. 511, 513, 602 P.2d 195, 197 (Ct.App.1979) (considering a motion for summary judgment submitted solely on the pleadings and without supporting affidavits). In effect, the only difference between this summary judgment proceeding and a review under Rule 1-012(B)(6) is the availability of GCM's affidavit in the determination of the legal sufficiency of GCM's claim. Thus, this Court will accept the facts as alleged by GCM in its complaint and in its affidavit for purposes of this motion and determine whether, as a matter of law, Kentucky Central is entitled to judgment.

IV. LEGAL SUFFICIENCY OF THE CLAIM

A. Aiding and Abetting a Breach of Fiduciary Duty

¶14 While we believe New Mexico has implicitly endorsed tort liability for intentionally causing a fiduciary to breach his or her duties, we now explicitly recognize this form of tort liability. We note that "in some states, it is still unclear whether there is aiding and abetting tort liability of the kind set forth in [Section] 876(b) of the Restatement [ (Second) of Torts (1979) ]." Central Bank v. First Interstate Bank, 511 U.S. 164, 181-82, 114 S.Ct. 1439, 1450, 128 L.Ed.2d 119 (1994) (holding that Section 10(b) of the Securities Exchange Act of 1934 does not provide a private civil action for aiding and abetting, relying on the text of the statute and congressional intent). Nonetheless, New Mexico recognizes tort liability for aiding and abetting another's tortious conduct.

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