Oliver v. Six Springs Domestic Water Users Ass'n

• Court: Court of Appeals of New Mexico
• Writing for the Court: VARGAS, Judge.
• Decision Date: 07 October 2019
• Docket Number: No. A-1-CA-36226,A-1-CA-36226
• Citation: Oliver v. Six Springs Domestic Water Users Ass'n, No. A-1-CA-36226 (N.M. App. Oct 07, 2019)
• Parties: THEONE OLIVER, JANET WHITE, JAMES CUMMINGS, SENA MALETT and LEONA DANLEY, Plaintiffs-Appellees, v. SIX SPRINGS DOMESTIC WATER USERS ASSOCIATION, Defendant-Appellant, and EDWARD BAKER, Individually and as president of the Six Springs Domestic Water Users Association, and its members CARL AND JANICE TUCKER, DENNIS AND BONNIE BELKNAP, ROBERT AND MARGARET RICHARDSON, FRANK AND CATHERINE STRANGIS, CHARLES AND BEVERLY MARTIN, DAVID AND AMANDA EDWARDS, DR. JAGDEV AND LESLIE SIGNH, BARBARA HOUSE, GERALD DODD, PATRICIA HENDZEL, JOAN GOODMAN, and ESTHER BAKER, Defendants.

THEONE OLIVER, JANET WHITE, JAMES CUMMINGS,SENA MALETT and LEONA DANLEY, Plaintiffs-Appellees, v. SIX SPRINGS DOMESTIC WATER USERS ASSOCIATION, Defendant-Appellant,andEDWARD BAKER, Individuallyand as president of the Six Springs Domestic Water Users Association,and its members CARL AND JANICE TUCKER,DENNIS AND BONNIE BELKNAP, ROBERTAND MARGARET RICHARDSON, FRANK AND CATHERINE STRANGIS,CHARLES AND BEVERLY MARTIN, DAVIDAND AMANDA EDWARDS, DR.JAGDEV AND LESLIE SIGNH, BARBARA HOUSE,GERALD DODD, PATRICIA HENDZEL,JOAN GOODMAN, and ESTHER BAKER, Defendants.

No. A-1-CA-36226

COURT OF APPEALS OF THE STATE OF NEW MEXICO

October 7, 2019

This decision of the New Mexico Court of Appeals was not selected for publication in the New Mexico Appellate Reports. Refer to Rule 12-405 NMRA for restrictions on the citation of unpublished decisions. Electronic decisions may contain computer-generated errors or other deviations from the official version filed by the Court of Appeals.

APPEAL FROM THE DISTRICT COURT OF OTERO COUNTY

Jerry H. Ritter, Jr., District Judge

Katz Herdman MacGillivray & Fullerton PC

Frank T. Herdman

Seth R. Fullerton

Samuel P. Ruyle

Santa Fe, NM

for Appellees

Sandra A. Grisham

Alamogordo, NM

for Appellant

MEMORANDUM OPINION

VARGAS, Judge.

{1} Defendant Six Springs Domestic Water Users Association (the Association) appeals from the district court's orders granting default judgment and attorney fees in favor of Plaintiffs Theone Oliver, Janet White, James Cummings, Sena Malett, and Leona Danley. The Association's appeal presents the following issues: (1) whether the district court had subject matter jurisdiction; (2) whether the district court erred in enforcing a purportedly invalid settlement agreement between the parties; (3) whether the district court erred in striking the Association's answer to Plaintiffs' complaint and granting default judgment in Plaintiffs' favor; and (4) whether the district court erred in awarding attorney fees to Plaintiff Oliver. We affirm.

BACKGROUND

{2} Following a dispute over water rights, the Association, Edwina Danley, Russell Graves, Paula Graves, Steven Wenrich, and Rita Wenrich entered into a settlement agreement (the Settlement Agreement), wherein the parties agreed to a division of water and water rights, to cooperate in planning, constructing, and maintaining common structures and equipment needed for the division of the water, and to refrain from conduct that would interfere with others' access to the water.

{3} Several years later, Plaintiffs filed a complaint against the Association, Edward Baker—individually and as president of the Association—and the Association's members (the Members). Plaintiffs alleged Baker tampered with the water collection and delivery system, and diverted the "water rights" of Plaintiffs without their permission. Plaintiffs sued for damages and injunctive relief, alleging claims of breach of contract, breach of fiduciary duty, waste, and conversion.

{4} Baker and two other officers of the Association—none of whom were licensed attorneys—filed an answer and counterclaims on the Association's behalf. Plaintiffs moved to strike the Association's answer and counterclaims, arguing the Association was required to appear in court through a licensed attorney because of its corporate status, and that its non-attorney officers were not permitted to file pleadings on behalf of the Association. Arguing the Association failed to plead or defend against the complaint as required under the Rules of Civil Procedure and New Mexico law, Plaintiffs sought entry of a default judgment. The Association, through counsel, filed a response to Plaintiffs' motion, arguing that it "was never served with process in this case, and has yet to receive a summons[,]" and that it was "prepared to file an [a]nswer and [c]ounter-[c]laim after proper service of process." The Association never filed an answer through counsel or moved to amend or supplement its answer so that it may be filed by counsel.

{5} The district court granted Plaintiffs' motion to strike the Association's answer and counterclaims. In its order, the district court ruled that the filing of pleadings on behalf of the Association constituted "the unauthorized practice of law" and that the pleadings should therefore be stricken from the record. Because the Association failed to file a timely, proper answer, the district court found the Association was in default. The district court entered a default judgment on liability against the Association and reserved the determination of damages until an evidentiary hearing.

{6} Following the district court's entry of default judgment, Plaintiffs filed a motion for attorney fees and costs in the amount of $23,457 against the Association. In their motion, Plaintiffs relied upon the Settlement Agreement which provided that "[s]hould litigation be reasonably necessary to enforce or interpret any provision of this agreement, the prevailing party, or parties, shall be entitled to recover its reasonable attorney fees from the party at fault or the party responsible for litigation being filed." Plaintiffs argued the Association was responsible for the filing of litigation, that it was found liable and was therefore "at fault[,]" and that the fees sought were "reasonable and . . . reasonab[ly] necessary to enforce the terms of the Settlement Agreement." The Association requested the district court deny Plaintiffs' motion, challenging the reasonableness of the attorney fees sought by Plaintiffs.

{7} Following an evidentiary hearing, the district court determined the amount of damages and reserved ruling on injunctive relief and attorney fees for later proceedings. Plaintiffs later moved for entry of "a final default judgment" and injunctive relief. In response to the Plaintiffs' motion, the Association argued Plaintiffs were not entitled to attorney fees because they refused to accept the Association's offer of settlement prior to the commencement of the lawsuit. The Association also challenged the injunctive relief sought and argued that the district court was without jurisdiction to determine ownership of water rights as there had been no adjudication of those rights.

{8} The Members filed a motion for summary judgment, challenging the reasonableness of attorney fees and arguing they were not liable for attorney fees. Shortly after the Members filed their motion, the district court entered a default judgment and granted injunctive relief against the Association. The district court ordered the Association to pay Plaintiff Oliver reasonable attorney fees in an amount to be determined at a later proceeding.

{9} Plaintiff Oliver moved for the district court to award $55,319.14 in attorney fees against the Association, arguing this motion "supersede[d]" Plaintiffs' previous motion for attorney fees because of the litigation that ensued following the Association's additional filings. After the Association failed to respond to Plaintiff Oliver's motion, she filed a notice of completion of briefing stating the Association was deemed to have consented to the relief sought in her motion. Following Plaintiff Oliver's notice, the district court entered a minute order granting Plaintiff Oliver's motion for attorney fees. Shortly thereafter, the Members filed a motion to set aside the district court's minute order. In their motion, the Members noted their attorney's absence from the country and that their attorney had not been served with a "file[-]stamped copy" of Plaintiff Oliver's motion for attorney fees. The Members also challenged the reasonableness of the attorney fees sought. The Association itself, however, did not challenge Plaintiff Oliver's motion for attorney fees. Accordingly, pursuant to its minute order, the district court entered an award attorney fees in favor of Plaintiff Oliver and against the Association in the amount of $55,319.14. This appeal followed.

DISCUSSION

{10} In its appeal from the district court, the Association argues the district court lacked subject matter jurisdiction, the district court erred in enforcing the Settlement Agreement as it was not an enforceable contract, the district court erred in striking the Association's answer and granting default judgment, and the district court erred in awarding attorney fees. We address each argument in turn.

Subject Matter Jurisdiction

{11} The Association first challenges the district court's subject matter jurisdiction. We review the question of whether the district court had subject matter jurisdiction de novo. Piedra, Inc. v. N.M. Transp. Comm'n, 2008-NMCA-089, ¶ 34, 144 N.M. 382, 188 P.3d 106. "The source of a district court's jurisdiction derives from the New Mexico Constitution." Ping Lu v. Educ. Tr. Bd. of N.M., 2013-NMCA-010, ¶ 9, 293 P.3d 186. "New Mexico district courts are courts of general jurisdiction having the power to hear all matters not excepted by the constitution and those matters conferred by law." Id. (internal quotation marks and citation omitted); see N.M. Const. art. VI, § 13 (providing the scope of the district courts' jurisdiction).

{12} The Association argues the district court was without subject matter jurisdiction in this case because the Settlement Agreement effectively granted water rights through contract, contravening New Mexico's statutory scheme for adjudicating water rights. However, Plaintiffs' complaint requested the enforcement of Baker's fiduciary duty as well as the terms of a contract, not the adjudication of water rights. Because this case arises from claims of breaches of contract and fiduciary duty, we conclude the district court had subject matter jurisdiction to adjudicate Plaintiff's claims. See Ping Lu, 2013-NMCA-010, ¶ 9 (explaining district courts' general jurisdiction). To the extent the Association argues the district court lacked subject matter jurisdiction because the Settlement Agreement was entered into in violation of the Association's articles of incorporation, we need not...