Poorbaugh v. Mullen

• Decision Date: 20 January 1981
• Docket Number: No. 4508,4508
• Citation: 96 N.M. 598,633 P.2d 706,1981 NMCA 9
• Parties: Fred W. POORBAUGH, Plaintiff-Appellee, v. Leo M. MULLEN, Defendant-Appellant.
• Court: Court of Appeals of New Mexico

Page 706

633 P.2d 706

96 N.M. 598

Fred W. POORBAUGH, Plaintiff-Appellee, v. Leo M. MULLEN, Defendant-Appellant.

No. 4508.

Court of Appeals of New Mexico.

Jan. 20, 1981.

Wollen & Segal, a Professional Corp., Roland T. Taylor, Albuquerque, for plaintiff-appellee

Michael G. Rosenberg, Albuquerque, Pickard & Singleton, Lynn Pickard, Santa Fe, for defendant-appellant.

OPINION

LOPEZ, Judge.

Plaintiff, Fred Poorbaugh, sued Leo Mullen for defamation and emotional distress resulting over a real estate transaction in which Mullen was the purchaser and Poorbaugh the broker or vendor. Defendant counterclaimed for fraud, breach of fiduciary duty, wrongful forfeiture, and related claims arising out of the same real estate transaction. The trial court ordered Summary judgment in favor of plaintiff's complaint and dismissed defendant's counterclaims. We reverse.

The issues on appeal are whether the Summary judgment was proper and whether the counterclaims should have been dismissed. We hold that both actions were in error. Summary judgment was improper because 1) there are genuine issues of material fact in dispute and 2) defendant is not collaterally estopped from litigating any of the issues by the final judgment in a prior lawsuit between Poorbaugh and the New Mexico Real Estate Commission. In addition the counterclaim for wrongful forfeiture states a proper cause of action.

The sale of land, from which this lawsuit arises, was for 160 acres of land in Rio Arriba County. The record indicates that, in August 1975, Poorbaugh bought the land from Melecio Lopez and Lopez's former wife for $80,000 and immediately sold it to Mullen for $125,000. According to Mullen, Poorbaugh was not the seller, but was Mullen's real estate agent, the Lopezes being the actual sellers. He maintains that Poorbaugh represented that the $125,000 was the price the Lopezes wanted and that he, Mullen, agreed to having the papers in Poorbaugh's rather than Lopez' name because he understood the Lopezes wanted it that way. It is undisputed that Poorbaugh paid the Lopezes a $33,500 down payment after he had received this amount from Mullen. Poorbaugh's version of the events is that Mullen always knew that Poorbaugh was acting on his own behalf, and that on learning of the amount of profit Poorbaugh made on the sale, he became angry and began to harass Poorbaugh with charges of fraud in letters threatening criminal prosecution. Poorbaugh asserts these charges were made to various other parties as well, including the Albuquerque National Bank. Mullen admits that he contacted the bank, which then refused to act as escrow agent on the Poorbaugh-Mullen contract. He also complained of Poorbaugh's conduct to the New Mexico Real Estate Commission, which, after a hearing where it found that Poorbaugh had failed to reveal to Mullen that he owned the Lopez property and had breached his duty as a broker in other ways, revoked Poorbaugh's license. The appeal of this decision resulted in an eventual reversal by the Bernalillo County District Court in Cause No. 12-76-00519, Poorbaugh v. New Mexico Real Estate Commission.

Because Mullen failed to pay Poorbaugh personally the first installment due on their contract, Poorbaugh declared a forfeiture and recorded the deed back to himself, thereby causing Mullen to lose his $33,500 down payment. On the advice of an attorney, Mullen had tendered the installment to the First National Bank in La Jara, Colorado, which was handling the collection on the Lopez-Poorbaugh contract. The Albuquerque National Bank, designated escrow agent on the Poorbaugh-Mullen contract, had refused to handle the escrow.

Genuine issues of disputed facts. Summary judgment is proper only if there is no genuine issue as to any material fact or the moving party is entitled to judgment as a matter of law. N.M.R.Civ.P. 56(c), N.M.S.A.1978; Goodman v. Brock, 83 N.M. 789, 498 P.2d 676 (1972). If the evidence is sufficient to create a reasonable doubt as to the existence of a genuine issue, summary judgment cannot be granted. Pharmaseal Laboratories, Inc. v. Goffe, 90 N.M. 753, 568 P.2d 589 (1977). All reasonable inferences are to be made in favor of the party opposing summary judgment. C & H Construction & Paving Co. v. Citizens Bank, 93 N.M. 150, 597 P.2d 1190 (Ct.App.1979); Smith v. Klebanoff, 84 N.M. 50, 499 P.2d 368 (Ct.App.), cert. denied, 84 N.M. 37, 499 P.2d 355 (1972). With these principles in mind, we examine the pleadings and depositions before us. Both parties verified their pleadings, which are thus treated as affidavits. See, Rekart v. Safeway Stores, Inc., 81 N.M. 491, 468 P.2d 892 (Ct.App.1970).

Disputes involving genuine issues of material facts exist with respect to both the claims and counterclaims. Poorbaugh is suing for defamation and intentional infliction of emotional distress. One of Mullen's defenses is that what he said was true. This dispute raises factual issues as to whether Poorbaugh did defraud Mullen. Fraud is a misrepresentation of a fact, known by the maker to be untrue, made with the intent to deceive and to induce the other party to act upon it, and upon which the other party relies to his detriment. Unser v. Unser, 86 N.M. 648, 526 P.2d 790 (1974). There is a factual issue of whether any misrepresentations were made by Poorbaugh to Mullen. If Poorbaugh was acting as a real estate broker, he may be liable as a fiduciary. Iriart v. Johnson, 75 N.M. 745, 411 P.2d 226 (1965), and the elements necessary to prove fraud are somewhat modified. See, Unser; Barber's Super Markets, Inc. v. Stryker, 84 N.M. 181, 500 P.2d 1304 (Ct.App.), cert. denied, 84 N.M. 180, 500 P.2d 1303 (1972). The question of whether Poorbaugh was acting as broker or as seller is contested by the parties, and this is a material factual issue. Poorbaugh claims that Mullen acted maliciously in accusing him of fraud before other people. The existence of malice is a question of fact. See, El Paso Natural Gas Co. v. Kysar Insurance Agency, Inc., 93 N.M. 732, 605 P.2d 240 (Ct.App.1979). Mullen claims that Poorbaugh intended to deceive him. Intent is also a question of fact. See, Maxey v. Quintana, 84 N.M. 38, 499 P.2d 356 (Ct.App.1972), cert. denied, 84 N.M. 37, 499 P.2d 355 (1972). The dispute over these genuine and material issues of fact precludes summary judgment, unless, as a matter of law, these issues have already been litigated and decided in favor of Poorbaugh.

Collateral estoppel. Poorbaugh asserts that Mullen is estopped from litigating the issue of whether Poorbaugh acted as a real estate agent in the transaction by the court's finding in the earlier case between Poorbaugh and the New Mexico Real Estate Commission that Poorbaugh was not acting as a broker, but sold the land for himself. Collateral estoppel bars the relitigation of issues and facts which were actually litigated, C & H Construction & Paving Co., and were necessary to support the judgment in a prior litigation with a different cause of action. Atencio v. Vigil, 86 N.M. 181, 521 P.2d 646 (1974). It is necessary in New Mexico that the parties in the second suit be those of the first suit, State v. Rogers, 90 N.M. 604, 566 P.2d 1142 (1977); Atencio; El Paso Natural Gas Co., or in privity with them. C & H Construction & Paving Co. Since Mullen was not a party, nor in privity with the New Mexico Real Estate Commission which was a party in the first suit, collateral estoppel does not apply.

Poorbaugh urges that Mullen, in that he testified before the New Mexico Real Estate Commission and failed to allege an agreement concerning a real estate commission, should be estopped in the present case from claiming that Poorbaugh acted as a broker. In effect, Poorbaugh is forwarding the adoption of the rule that, in certain circumstances, a non-party who participates in litigation is estopped from relitigating the same issues in a future suit.

If a non-party who thus participates in litigation has an interest sufficiently close to the matter in litigation, and has adequate opportunity to litigate in support of or in defense against the cause of action on which the suit is based, the policies underlying the doctrine of judicial finality require that the participating non-party should be bound by the resulting judgment to the same extent as though he were a party to the action.

1) B Moore's Federal Practice P 0.411(6) at 1552 (2d ed. 1980); see, Restatement of Judgments § 84 (1942). We need not decide whether to adopt this rule in New Mexico at present. Even if it were the law here, Poorbaugh could not benefit from it. Moore's continues:

Generally speaking, the rule as to participating non-parties requires that the non-party have control, or at least joint control of the prosecution or defense of the suit. And he must be able to control the decision to appeal or not to appeal. Instigating litigation ... is not sufficient. Nor is a non-party's participation sufficient if he merely assists ... by procuring witnesses or evidence, unless, by such assistance, the non-party acquires the requisite degree of control.

Moore's supra at 1564-66. Moreover, the sufficiency of a non-party's control and participation is a question of fact. Gerrard v. Larsen, 517 F.2d 1127 (8th Cir. 1975); Ransburg v. Automatic Finishing Systems, Inc., 412 F.Supp. 1357 (E.D.Pa.1976); Watts v. Swiss Bank Corp., 27 N.Y.2d 270, 265 N.E.2d 739, 317 N.Y.S.2d 315 (1970). The burden of affirmatively proving sufficient control rests upon the party seeking to invoke the conclusive force of the judgment. Ransburg; Moore's supra at 1567. The facts adduced by Poorbaugh, that Mullen filed the complaint which instigated the proceedings of the Real Estate Commission that he testified before it and that Mullen and his attorney were present at the de novo hearing in the district court, would be insufficient to show Mullen had the requisite control in those proceedings to permit collateral estoppel to be used against him.

Wrongful...