Gonzales v. Lopez

• Decision Date: 27 June 2002
• Docket Number: No. 21,813.,21,813.
• Citation: 132 N.M. 558,2002 NMCA 86,52 P.3d 418
• Parties: Rose L. GONZALES, Personal Representative of the Estate of Leonarda L. Lopez, Deceased, Plaintiff-Appellee, v. Leeroy LOPEZ, Ruthalene P. Lopez, and Eddie Paul Lopez, Defendants-Appellants.
• Court: Court of Appeals of New Mexico

52 P.3d 418

132 N.M. 558

2002 NMCA 86

Rose L. GONZALES, Personal Representative of the Estate of Leonarda L. Lopez, Deceased, Plaintiff-Appellee, v. Leeroy LOPEZ, Ruthalene P. Lopez, and Eddie Paul Lopez, Defendants-Appellants.

No. 21,813.

Court of Appeals of New Mexico.

June 27, 2002.

Kelan Emery, Taos, NM, for Appellee.

G. Holdt Garver, G. Holdt Garver, Chartered, Albuquerque, NM, for Appellants.

OPINION

CASTILLO, Judge.

{1} In the final years of her life, Leonarda L. Lopez (Mother) transferred the bulk of her estate to her sons Leeroy and Eddie Paul Lopez and Leeroy's wife, Ruthalene (Peggy) (together referred to as Defendants). Mother died in October 1996 at the age of ninety-two and was survived by her ten children. Daughter Rose L. Gonzales, as personal representative of Mother's estate (Estate), filed a complaint against Defendants alleging undue influence, fraud, misrepresentation, and breach of contract in obtaining warranty deeds and real estate contracts to property originally owned by Mother. Defendants appeal from the district court judgment setting aside the deeds and real estate contracts, awarding attorney fees, and assessing punitive damages against them. We reverse the award of attorney fees and affirm on all other issues.

BACKGROUND

{2} Mother owned four tracts of real property in Taos County, New Mexico identified as the Chamisal, Store, Ojito, and Home Place properties. Concerned about her health, Mother discussed with Leeroy and Peggy the potential sale of some of her property in return for payment of monies, personal care, and property maintenance. On May 8, 1990, Mother signed a warranty deed transferring the Store property to Leeroy and Peggy. Also on May 8, 1990, Mother entered into a real estate contract with Leeroy and Peggy for the Chamisal property (first Chamisal property contract). Sometime after executing the first Chamisal property contract, Mother realized it did not contain the terms she had agreed upon. In September 1991 Mother filed an affidavit of termination and later that year sued Leeroy and Peggy for fraud, misrepresentation, and breach of contract (1991 action). In 1992 the parties settled their differences. They executed a settlement agreement and an order of dismissal with prejudice was entered in the 1991 action.

{3} In 1993, three more transactions occurred. On March 8, 1993, Mother signed a Contract of Purchase and Sale for the sale of the Ojito property to Defendants (the Ojito property contract). On March 30, 1993, Mother signed another contract for the sale of the Chamisal property to Leeroy and Peggy (second Chamisal property contract). On August 3, 1993, Mother executed a warranty deed transferring the Home Place property to Eddie Paul. Leeroy recorded the Home Place deed without Eddie Paul's knowledge or consent. The Home Place deed was not delivered to Eddie Paul during Mother's lifetime and he was unaware that Mother had executed a deed to him until after her death. We first address Defendants' procedural issues and then turn to their remaining claims of error. Other relevant facts and the district court's rulings are included in the pertinent sections.

DISCUSSION

I. Procedural Issues

{4} In its original complaint, the Estate alleged that Defendants unduly influenced Mother into signing the contracts and deeds, and made fraudulent representations regarding the purchase price and descriptions of the property to be conveyed. The Estate further alleged breach of contract for failure to make the required contract payments and to provide maintenance and care to Mother as agreed by the parties. After discovery, the Estate filed an amended complaint asserting a new claim that the conveyance of the Home Place property to Eddie Paul should be set aside as an incomplete gift, and deleting the allegations of undue influence by Eddie Paul and Peggy as to this property only. In response to the amended complaint, Defendants filed a jury demand requesting a jury trial on all the issues or, in the alternative, on the new issues raised by the amended complaint. In a separate pleading Defendants also filed an answer to the amended complaint (second answer), a counterclaim, a third-party complaint, and another jury demand as to the issues raised by these pleadings. The district court struck both jury demands as well as the counterclaim, third-party complaint, and a portion of Defendants' second answer. Defendants claim several errors relating to the district court's pretrial rulings.

A. Striking Portions of the Answer to Amended Complaint

{5} Defendants claim that the district court erred in striking their second answer because they were entitled to respond to the new allegations in the amended pleading. In analyzing this issue, we observe the following. When preparing its amended complaint, the Estate was required to reassert the allegations previously made in the original complaint, or risk abandoning them. See Griego v. Roybal, 79 N.M. 273, 275, 442 P.2d 585, 587 (1968)

(stating that "failure to re-allege allegations of an original pleading constitutes an abandonment of those allegations not re-alleged"). Consequently, the amended complaint contained almost all the allegations of the original complaint plus the new theory regarding the uncompleted gift of the Home Place property. When Defendants responded to the amended complaint, they denied allegations previously admitted in their answer to the original complaint (first answer).

{6} The district court ruled that Defendants could only make admissions, denials, and affirmative defenses in response to the new allegations. Thus, the district court struck those portions of the second answer that related to the original complaint and allowed Defendants' responses to the new allegations. Defendants' answers to the original complaint are found in the first answer, and their responses to the new allegations are found in the second answer. We are not aware of any rule or case law requiring the district court to accept without some good cause shown an amended answer which changes responses to identical allegations in the original complaint. Defendants made no credible effort below to explain why changes from responses in their first answer were required. Further, at the hearing on the motion to strike the second answer, the district court voiced a concern about the potential for requiring discovery if previously admitted allegations were now denied. Given that the trial was then just days away, we believe these concerns were reasonable. We conclude, therefore, that the district court did not abuse its discretion in striking the portions of Defendants' second answer relating to the original allegations. See Rule 1-012(F) NMRA 2002 (providing that district court may strike from the pleadings any insufficient defense or redundant or immaterial matters).

B. Right to Jury Trial on Amended Complaint

{7} Defendants argue that by amending the complaint the Estate created a new issue that entitled them to a jury trial. The New Mexico Constitution continues the right to a jury trial in those cases where it existed either at common law or by statute at the time of the adoption of the constitution. See N.M. Const. art. II, § 12 ("The right of trial by jury as it has heretofore existed shall be secured to all and remain inviolate."); see also Evans Fin. Corp. v. Strasser, 99 N.M. 788, 789, 664 P.2d 986, 987 (1983)

("The common law jury trial existed in the Territory of New Mexico prior to adoption of the Constitution."). The distinction between legal and equitable issues has remained the test for determining whether common law jurisdiction and the right to a jury trial exists. See id. "If the remedy sought is legal, parties are entitled to a jury trial; if the remedy sought is equitable, there is no jury trial as of right." Id. In the amended complaint, the Estate sought to have the Home Place property deed set aside as an incomplete gift. A suit to set aside a deed on this basis is one in equity, and an action for which a jury trial as of right traditionally did not exist under common law. Cf. Grandi v. LeSage, 74 N.M. 799, 806, 399 P.2d 285, 290 (1965) (distinguishing an action at law for damages from a suit in equity to set aside a contract).

{8} Moreover, there is no statute conferring a right to a jury trial under these circumstances. Defendants rely on In re Last Will & Testament of Ferrill, 97 N.M. 383, 389-90, 640 P.2d 489, 495-96 (Ct.App.1981), a will contest case in which this Court discussed the right to trial by jury under NMSA 1978, § 45-1-306 (1975) of the New Mexico Probate Code, which provides:

If demanded, in the manner provided by the Rules of Civil Procedure, a party is entitled to a trial by jury in a formal testacy proceeding and in any proceeding in which any controverted question of fact arises as to which any party has a constitutional right to trial by jury.

Ferrill is distinguishable. The present case is not a will contest case, and is not governed as such by the Probate Code. Further, as we stated before, there is no constitutional right to a jury trial on equitable issues. In addition, Defendants' reliance on Griego is misplaced. In Griego the counter-claimant converted a "suit in equity" to an "action at law" by abandoning the claim to quiet title and pleading possession of land. Here, nothing in the record suggests that the equitable nature of the Estate's suit was converted to an action at law. Cf. Griego, 79 N.M. at 276,

442 P.2d at 588.

C. Right to Jury Trial on Dismissed Counterclaim

{9} Defendants also argue that they were entitled to a jury trial on the legal issues raised by their counterclaim. It is established that parties to a suit in equity have a right to a jury trial when their counterclaim raises a legal issue. See Evans Fin. Corp., 99 N.M. at 791, 664 P.2d at 989.

When the applicable rule of procedure requires or allows the defendant to assert as a counterclaim any claim

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