Meiboom v. Watson

Decision Date12 January 2000
Docket NumberNo. 25,207.,25,207.
Citation128 N.M. 536,994 P.2d 1154,2000 NMSC 4
PartiesDavid MEIBOOM and Gary Doberman, Plaintiffs-Respondents, v. Stephen WATSON, Defendant-Petitioner.
CourtNew Mexico Supreme Court

Freedman, Boyd, Daniels, Hollander, Goldberg & Cline, P.A., K.C. Maxwell, Joseph Goldberg, Albuquerque, for Petitioner.

Law Office of Daymon B. Ely, Daymon B. Ely, Albuquerque, Walker & Van Heijenoort, William G. Walker, Albuquerque, for Respondents.

OPINION

BACA, Justice.

{1} Petitioner-Defendant, Stephen Watson, challenges the Court of Appeals' holding that the district court erred by denying plaintiffs' motion for relief from a stipulated dismissal pursuant to Rule 1-060(B)(6) NMRA 1999. See Meiboom v. Watson, 1998-NMCA-091, ¶ 17, 125 N.M. 462, 963 P.2d 539. We have jurisdiction pursuant to NMSA 1978, § 34-5-14(B) (1972), and on certiorari we consider: 1) whether the Court of Appeals, by concluding that the district court retained jurisdiction over plaintiffs' Rule 1-060(B)(6) motion, improperly overruled this Court's opinion in King v. Lujan, 98 N.M. 179, 646 P.2d 1243 (1982), which held that the statute of limitations is not tolled by a dismissal for lack of prosecution; and 2) whether the Court of Appeals erred by concluding that the district court failed to fully evaluate the merits of plaintiffs' motion. Although we conclude the district court improperly denied plaintiffs' motion for lack of jurisdiction, we hold that King was not overruled. We also reverse the Court of Appeals' holding that the district court failed to fully evaluate the merits of the motion and we affirm the district court's denial of plaintiffs' Rule 1-060(B)(6) motion.

I.

{2} This case arose from a failed business relationship. In 1984, Watson started a small business to produce and sell paper products made from cotton denim rag scraps. In 1990, Watson entered into a business relationship with Gary Doberman and David Meiboom to establish Denim Paper Products, Inc., a rag waste recycling business. By February 1991, both parties had a falling out and retained counsel. In April 1994, the parties reached an agreement to dissolve the partnership. As part of the agreement, Watson agreed to purchase plaintiffs' stock in the company and agreed to disclose the status of existing and potential contracts with Denim Paper.

{3} In October 1993, two years after the agreement, plaintiffs filed a complaint alleging that Watson had made fraudulent misrepresentations about the status of Denim Paper's negotiations with Levis Strauss & Co. In November 1993, Watson filed a motion to dismiss the complaint for failure to plead fraud with sufficient particularity. In January 1994, the district court granted the motion to dismiss without prejudice and allowed plaintiffs to file an amended complaint. Plaintiffs amended the complaint and Watson filed another motion to dismiss on the same grounds. In April 1994, the district court agreed that the amended complaint again failed to plead fraud with particularity, but still granted the motion in part and denied it in part, allowing the complaint to proceed only as to those areas where plaintiffs' attorney provided specific responses to the allegations of fraud. The district court also limited discovery and recommended that plaintiffs depose key witnesses so that it could "decide if we have a cause of action here."

{4} In February 1995, the district court found that no significant action had been taken on the case and, sua sponte, dismissed the action without prejudice for lack of prosecution. Plaintiffs moved to reinstate the case, and despite the motion's failure to comport with local rules and its characterization by the district court as "the barest motion I've seen in ten years on the bench," the court nonetheless agreed to reinstatement subject to plaintiffs satisfying certain conditions. The conditions included deposing key witnesses by a certain date and preparation of pretrial orders. Plaintiffs failed to comply with the court's conditions. On June 28, 1995, the district court approved a stipulated dismissal of the complaint and the order was filed on August 15, 1995.

{5} Represented by new counsel, plaintiffs filed a Rule 1-060(B)(6) motion for relief from the stipulated dismissal on August 29, 1996, more than one year after the dismissal order was filed. They alleged that their previous attorney repeatedly misled them and lied about the status of their case well after it was dismissed.

{6} Watson opposed the motion arguing that, based on our reasoning in King v. Lujan, the district court lacked jurisdiction to grant relief because the statute of limitations had expired on the original cause of action. See King, 98 N.M. 179, 646 P.2d 1243. Alternatively, Watson argued that the plaintiffs failed to establish "exceptional circumstances" sufficient to support relief under Rule 1-060(B)(6). See Marberry Sales Inc. v. Falls, 92 N.M. 578, 580, 592 P.2d 178, 180 (1979). In November 1996, the district court addressed the merits of the motion but found that, based on King, the jurisdictional issue controlled the disposition of the matter and denied plaintiffs' motion to reinstate the case.

{7} Distinguishing the facts of this case from King, and relying on Wershaw v. Dimas, 1996-NMCA-118, ¶ 4, 122 N.M. 592, 929 P.2d 984, and Gathman-Matotan Architects and Planners, Inc. v. State Dep't of Fin. & Admin., 109 N.M. 492, 494-95, 787 P.2d 411, 413-14 (1990), the Court of Appeals reversed the district court. Meiboom, 1998-NMCA-091, ¶¶ 1, 9,125 N.M. 462,963 P.2d 539. The Court of Appeals in Meiboom held that the district court had jurisdiction to consider the merits of the motion despite the expiration of the statute of limitations, 1998-NMCA-091, ¶¶ 1, 9, 125 N.M. 462, 963 P.2d 539, and remanded the matter for a hearing on the merits, see id. ¶ 13, concluding the district court "did not thoroughly evaluate the parties' evidence on the merits of the Plaintiffs' motion for reinstatement," id. ¶ 16. Defendant now appeals this ruling, arguing essentially two points. First, Watson argues that the Court of Appeals impermissibly overruled this Court's opinion in King v. Lujan and therefore asserts that the district court correctly determined that King deprived the district court of jurisdiction. In the alternative, Watson argues if the district court did have jurisdiction then it properly evaluated the merits of the case, and therefore that the Court of Appeals erred in remanding for a more thorough evaluation.

{8} We hold that the district court improperly based its denial of plaintiffs' motion for lack of jurisdiction on King. In addition, since we conclude that King and Wershaw are both premised on a Rule 1-041(E)(2) NMRA 1999 (as amended through 1990) analysis, which we identify as significantly different than the Rule 1-060(B)(6) motion at issue here, we find that they are not controlling authority in this case. As such, we hold that the Court of Appeals' decision does not overrule King. We also reverse the Court of Appeals' order remanding the matter and conclude that the district court sufficiently addressed the merits of plaintiffs' motion. Accordingly, we affirm the district court's denial of plaintiffs' motion on the merits.

II.

{9} Although we ultimately conclude that the district court's reliance on King to deny plaintiffs' motion for lack of jurisdiction was improper, we disagree with Watson's claim that the Court of Appeals' opinion in Meiboom overrules King. The Court of Appeals correctly determined that King's analysis of the statute of limitations issue did not deprive the district court of jurisdiction. However, its interpretation and application of Wershaw and Gathman-Matotan to support the conclusion that the district court had jurisdiction in this matter is misplaced.

A.

{10} At the November 1996 hearing to consider plaintiffs' request for relief, the district court judge denied the motion for lack of jurisdiction concluding "the basis of [my ruling] is basically King v. Lujan." The Court of Appeals correctly determined that the district court erred by relying on King to conclude that it lacked jurisdiction because the statute of limitations had run.

{11} In King, this Court held that the statute of limitations is not tolled by a suit dismissed without prejudice. 98 N.M. at 181, 646 P.2d at 1245; see also Gathman-Matotan 109 N.M. at 495, 787 P.2d at 414 (limiting King's scope to dismissals for lack of prosecution). King held that because the statute of limitations had run four years before plaintiff had filed a motion to reinstate the case, the trial court lacked jurisdiction and thus erred by granting plaintiff's motion to reinstate. King, 98 N.M. at 181, 646 P.2d at 1245. The Court also balanced the interests of the parties stating that "[a] party who has slept on his rights should not be permitted to harass the opposing party with a pending action for an unreasonable time." Id.

{12} In assessing the applicability of King to the facts of this case, we disagree with the district court's conclusion that King "must have been a 60(B)(6) case because the reinstatement was well over a year after the order of dismissal for lack of prosecution." In King, the Court never explicitly states the specific rule by which the moving party sought relief. Our own review of King leads us to conclude that those plaintiffs were seeking relief under Rule 1-041(E)(2), which governs reinstatement of matters dismissed for lack of prosecution. The opinion makes several references to and discusses the guiding principles of Rule 1-041 and makes no reference to Rule 1-060(B)(6). See King, 98 N.M. at 180-81,646 P.2d at 1244-45. Both Wershaw, 122 N.M. at 594,929 P.2d at 986, and Gathman-Matotan, 109 N.M. at 494-95,787 P.2d at 414-14, cite King with approval and both discuss the relationship between Rule 1-041 dismissals for lack of prosecution and statute of limitations concerns. Since we conclude that the decision...

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