Gutierrez v. Padilla
| Decision Date | 29 March 2023 |
| Docket Number | A-1-CA-39286 |
| Parties | EDDIE GUTIERREZ, an individual; PERFORMANCE TOOL AND EQUIPMENT, INC., a New Mexico corporation; and SAMABE, CORP., a New Mexico corporation, Plaintiffs-Appellants, v. BEN PADILLA, an individual; JOHN LASTRA, individually and as a licensed New Mexico agent; and NEW MEXICO REAL ESTATE ADVISORS, INC. d/b/a COLLIERS INTERNATIONAL, a New Mexico corporation, Defendants-Appellees. |
| Court | Court of Appeals of New Mexico |
Corrections to this opinion/decision not affecting the outcome, at the Court's discretion, can occur up to the time of publication with NM Compilation Commission. The Court will ensure that the electronic version of this opinion/decision is updated accordingly in Odyssey.
APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY Joshua A Allison, District Court Judge
Donald F. Kochersberger III
Alicia M. McConnell
Albuquerque, NM
Tal Young, P.C.
Steven Tal Young
Albuquerque, NM
for Appellants
Moses, Dunn, Farmer & Tuthill, P.C.
Joseph L. Werntz
for Appellee Ben Padilla Modrall, Sperling, Roehl, Harris & Sisk, P.A.
Elizabeth A. Martinez
Sonya R. Burke
Albuquerque, NM
for Appellee John Lastra
{¶1} This appeal arises from the sale of two automotive supply businesses. Plaintiffs Eddie Gutierrez and Samabe Corporation bought two businesses owned by Defendant Ben Padilla, Performance Tool and Equipment, Inc. (PTE), and Performance Equipment of El Paso, Inc. (collectively, the Performance Companies). In district court, Plaintiffs alleged that Padilla and the listing broker, Defendant John Lastra, made misrepresentations about the condition of the Performance Companies during the sale and breached various terms of the sale contract. Padilla counterclaimed, alleging Plaintiffs had breached a portion of the contract concerning how the proceeds of the sale of used inventory would be handled after Plaintiffs took over. After a bench trial, the district court awarded damages to both Plaintiffs and Padilla on their respective claims for breach of contract.
{¶2} Plaintiffs appeal and argue that the district court erred by (1) granting summary judgment in favor of Lastra on Plaintiffs' Unfair Practices Act claim, (2) granting summary judgment in favor of Lastra on Plaintiffs' negligent misrepresentation claim, (3) dismissing Plaintiffs' tort claims against Padilla as barred by the economic loss doctrine, (4) dismissing Plaintiffs' claim for damages for potential tax liability resulting from PTE's 2014 tax return, (5) concluding that Plaintiffs breached the parties' inventory agreement, and (6) concluding that Padilla did not breach the contract. We affirm.
{¶3} Padilla was the sole shareholder and president of the Performance Companies. In 2015, Padilla hired Lastra as his listing broker to list the Performance Companies for sale. Lastra wrote an Initial Offering Profile (IOP) for the businesses, which contained an overview of the Performance Companies, their product lines, and their profitability. Around that same time, Plaintiff Gutierrez was looking to purchase a business and contacted Lastra seeking information about businesses for sale. After signing a confidentiality agreement, Lastra gave Plaintiff Gutierrez propriety information about the Performance Companies.
{¶4} Plaintiff Gutierrez signed a first letter of intent in April of 2015 for the purchase of the Performance Companies. This started a due diligence period where Plaintiffs had access to all financial records and customer lists of the Performance Companies. However, Plaintiffs were unable to secure financing for the purchase and terminated the letter of intent in June of 2015. {¶5} Plaintiff Gutierrez signed a second letter of intent for the purchase of the Performance Companies in November of 2015. Afterward, Plaintiffs continued to have access to financial and customer information for the Performance Companies. On January 8, 2016, the parties signed a stock purchase agreement (SPA), which set out the terms of the sale. After the sale was complete, the businesses struggled, suffering a decline in sales and service income, losing key employees, and losing the supplier of the most profitable equipment line.
{¶6} Two years after executing the SPA, Plaintiffs filed suit against both Lastra and Padilla. Plaintiffs' claims were largely based on alleged misrepresentations that occurred leading up to their purchase of the Performance Companies.
{¶7} Plaintiffs asserted ten claims against Lastra. In lieu of filing an answer, Lastra filed a Rule 1-012(B)(6) NMRA motion to dismiss all of Plaintiffs' claims. The district court granted the motion as to five of the claims but allowed five others to continue: unjust enrichment, negligence, professional negligence, negligent misrepresentation, and violation of the Unfair Practices Act (UPA), NMSA 1978, §§ 57-12-1 to -26 (1967, as amended through 2019), though the court narrowed the UPA cause of action to only those claims arising under Section 57-12-2(D)(14).
{¶8} Lastra later moved for summary judgment on the five remaining claims. The district court granted summary judgment on all but one: Plaintiffs' claim for negligent misrepresentation, which alleged that Lastra had made misrepresentations in the IOP at the time it was provided to Plaintiffs. During trial, at the close of Plaintiffs' case in chief, Lastra moved for dismissal of the remaining negligent misrepresentation claim. The district court granted the motion in a letter ruling, which was incorporated in the final findings of fact and conclusions of law.
{¶9} Plaintiffs asserted fifteen claims against Padilla. Through the course of three summary judgment motions, the district court granted summary judgment in favor of Padilla on Plaintiffs' UPA claim, dismissed Plaintiffs' claims for business interruption, loss of opportunity, accounting, and punitive damages as standalone claims, and dismissed Plaintiffs' tort claims as barred by the economic loss doctrine.
{¶10} Plaintiffs and Padilla went to trial on Plaintiffs' claims for breach of contract, breach of the covenant of good faith and fair dealing, and contractual indemnity, and on Padilla's counterclaim for breach of contract. Following a six-day bench trial, the district court issued detailed findings and conclusions. The court concluded that Padilla had breached the SPA by receiving money for products and services sold or performed before the closing date but not billed until after the closing date, and awarded Plaintiffs damages in the amount of $149,798 on that claim. On Padilla's counterclaim, the court determined that Plaintiffs owed Padilla money for new inventory, for used inventory sold after the closing, and for sales and services completed before the closing but reconciled after the closing. The court awarded Padilla damages in the amount of $137,075.01. Therefore, in the final calculation, the district court determined that Padilla owed Plaintiffs $12,722.99. The district court deemed Padilla the prevailing party and awarded him attorney fees and costs.
{¶11} Plaintiffs timely appealed to this Court.
{¶12} We first address Plaintiffs' argument that the district court erred in granting summary judgment in favor of Lastra on Plaintiffs' UPA claim. Plaintiffs' UPA claim was grounded in the theory that Lastra made several misrepresentations about the condition of the Performance Companies in the IOP. Lastra argued the UPA claim failed as a matter of law because the UPA only applies to the sale of goods or services, and any alleged misrepresentations in the IOP were made in connection with the sale of a business, which is not a good or service under the UPA. The district court agreed and granted summary judgment after concluding that the UPA "is not applicable to the stock purchase transaction that is the subject of this action."
{¶13} On appeal, Plaintiffs argue that their UPA claim was based on Lastra's provision of brokerage services, not the sale of the business. Lastra responds that (1) he did not actually provide services to Plaintiffs, and (2) the district court made findings of fact after trial that preclude Plaintiffs' claim as a matter of law. We decide this issue on the grounds proposed by Lastra's second argument. See Bd. of Cnty. Comm'rs of Cnty. of Bernalillo v. Chavez, 2008-NMCA-028, ¶ 12, 143 N.M. 543, 178 P.3d 828 (providing that "an appellate court will affirm the district court if it is right for any reason and if affirmance is not unfair to the appellant" and "the reviewing court is not limited to the district court's reasoning in affirming a grant of summary judgment" (internal quotation marks and citation omitted)).
{¶14} This Court reviews the grant of summary judgment de novo. Zamora v. St. Vincent Hosp., 2014-NMSC-035, ¶ 9, 335 P.3d 1243. "Summary judgment is appropriate in the absence of any genuine issue of material fact and where the movant is entitled to judgment as a matter of law." Id. When reviewing a grant of summary judgment "we examine the whole record for any evidence that places a genuine issue of material fact in dispute, and we view the facts in a light most favorable to the party opposing the motion and draw all reasonable inferences in support of a trial on the merits." Handmaker v. Henney, 1999-NMSC-043, ¶ 18, 128 N.M. 328, 992 P.2d 879 (internal quotation marks and citation omitted). In this case, the record contains findings and conclusions following a bench trial that bear on the elements of Plaintiffs' UPA claim. To the extent those findings are...
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