Roscoe v. U.S.Life Title Ins. Co. of Dallas

• Decision Date: 06 April 1987
• Docket Number: No. 16333,16333
• Citation: 105 N.M. 589,734 P.2d 1272,1987 NMSC 28
• Parties: Benjamin J. ROSCOE and Geraldine Roscoe, Plaintiffs-Appellants, v. U.S.LIFE TITLE INSURANCE CO. OF DALLAS, a Texas Corporation and U.S. Life Title Company of Albuquerque, a New Mexico Corporation, Defendants-Appellees.
• Court: New Mexico Supreme Court

Page 1272

734 P.2d 1272

105 N.M. 589

Benjamin J. ROSCOE and Geraldine Roscoe Plaintiffs-Appellants, v. U.S.LIFE TITLE INSURANCE CO. OF DALLAS, a Texas Corporation and U.S. Life Title Company of Albuquerque, a New Mexico Corporation Defendants-Appellees.

No. 16333.

Supreme Court of New Mexico.

April 6, 1987.

[105 NM 589] Thomas J. Clear, Jr., Clear & Clear, P.A., Albuquerque, for plaintiffs-appellants.

Leonard G. Espinosa, Anne D. Goodman, Moses, Dunn, Beckley, Espinosa & Tuthill, Albuquerque, for defendants-appellees.

OPINION

WALTERS, Justice.

Benjamin and Geraldine Roscoe (Roscoes) brought suit against USLife Title Company of Albuquerque and its underwriter, USLife Title Insurance Company of Dallas (USLife), allegedly to enforce a title insurance contract in connection with Roscoes' purchase of real property. USLife's motion to dismiss the original complaint was granted with leave to amend. Roscoes' amended complaint for damages was dismissed on USLife's motion for summary judgment, and Roscoes appeal. We affirm.

In 1976, Benjamin Roscoe negotiated to purchase from Anne Macy an apartment complex in Albuquerque. He prepared and signed a document of purchase, agreeing to assume the existing mortgage lien on the property. After the agreement was signed, it was taken to USLife for preparation of the closing documents. An attorney employed by USLife on behalf of both buyer and seller reviewed those documents. At the closing on July 30, 1976, Roscoes signed a real estate contract subject to a mortgage in the amount of $119,055.04. Neither the assumption purchase agreement nor the real estate contract mentioned that a balloon payment was due under the terms of the mortgage on or before October 1, 1984.

Early in 1984, Roscoes decided to sell the property and at that time the balloon payment came to their attention. Roscoes made a demand on USLife for damages claimed because the balloon payment had not been mentioned as a term of the real estate contract. USLife denied Roscoes' claim, and this suit followed.

We address two issues on appeal:

1. Whether Roscoes' claim is barred by the statute of limitations.

2. Whether USLife had a duty to disclose or notify Roscoes of the balloon payment contained in the underlying real estate mortgage note, or include it as a term in the closing documents.

I.

Roscoes' original complaint was entitled "Complaint to Enforce Contract." That complaint was dismissed with leave to amend. The first amended complaint alleged damages suffered because of USLife's "negligence or oversight" in not informing Roscoes of the balloon payment. The statute of limitations for contract actions under NMSA 1978, Section 37-1-3(A) is six years. The following Section 37-1-4 provides a four-year limitation for actions in negligence. Since nearly eight years had elapsed between the date of closing and the initiation of this action, either claim normally would be barred.

Roscoes argue, however, that NMSA 1978, Section 37-1-7 applies:

In actions for relief, on the ground of fraud or mistake, and in actions for injuries to, or conversion of property, the cause of action shall not be deemed to have accrued until the fraud, mistake, injury or conversion claimed of, shall have been discovered by the party aggrieved.

On a motion for summary judgment, the party claiming that the statute of limitations should be tolled has the burden of alleging sufficient facts that, if proven, would toll the statute. Stringer v. Dudoich, 92 N.M. 98, 583 P.2d 462 (1978). Roscoes' complaint does contain an allegation that they did not discover the balloon payment until early in 1984, but the complaint attributes to USLife none of the grounds enumerated in Section 37-1-7 as a reason for their own failure to discover the terms of the assumed mortgage. We recognize that summary judgment is a drastic remedy. Cebolleta Land Grant v. Romero, 98 N.M. 1, 644 P.2d 515 (1982). We also agree that a statute which tolls the statute of limitations should be liberally construed to reach the merits if possible. In re Goldsworthy's Estate, 45 N.M. 406, 115 P.2d 627 (1941). Nevertheless, even the most liberal construction of Section 37-1-7 cannot lead, as Roscoes urge, to equating a general allegation of negligence with the narrow legal concept of mistake or fraud for purposes of tolling the statute.

Even if Roscoes' allegations could be construed to allege mistake or a kind of constructive fraud--a construction we do not think possible--we are of the opinion that the statute would still bar the complaint. In Albuquerque Nat'l Bank v. Albuquerque Ranch Estates, 99 N.M. 95, 654 P.2d 548 (1982), we refused to allow a defendant the equitable defense of mistake of fact where he had the opportunity to learn the truth and had failed to exercise reasonable diligence to do so. Similarly, in an action for constructive fraud the court of appeals, construing the predecessor of Section 37-1-7, held that the statute is tolled until the right of action is discovered or until, by the exercise of ordinary diligence, it could have been discovered. Hardin v. Farris, 87 N.M. 143, 530 P.2d 407 (Ct.App.1974); cf. Krupiak v. Payton, 90 N.M. 252, 561 P.2d 1345 (1977).

Mr. Roscoe was aware of the existing mortgage when he agreed to buy the property, since he wrote the purchase agreement. It is well-settled that a person entering into a contract has a duty to read and familiarize himself with...