Sanchez v. Saylor, 19,470.

Decision Date01 August 2000
Docket NumberNo. 19,470.,19,470.
Citation13 P.3d 960,129 N.M. 742,2000 NMCA 99
PartiesRobert SANCHEZ and Eleanor Sanchez, husband and wife, R & E Sanchez Family Third Limited Partnership, and R & E Sanchez Fourth Family Limited Partnership, Plaintiffs/Appellees/Cross-Appellants, v. Richard B. SAYLOR and Susan J. Saylor, a/k/a Susan J. Scarborough, husband and wife, Defendants/Appellants/Cross-Appellees, v. Coors Ltd., R.R.G., Additional Defendant/Counterclaimant/Appellant/Cross-Appellee.
CourtCourt of Appeals of New Mexico

Esteban Aguilar, Aguilar Law Offices, P.C., Albuquerque, NM, Elizabeth Losee, Law Office of Elizabeth Losee, Corrales, NM, for Appellees/Cross-Appellants.

Victor R. Marshall, Victor R. Marshall & Associates, P.C., Albuquerque, NM, for Appellants/Cross-Appellees.

Certiorari Denied, No. 26,616, November 9, 2000.

OPINION

SUTIN, Judge.

{1} This case involves business and court battles between business partners Robert Sanchez and Robert Saylor. Both appeal. We get the flavor of the case in the court's opening finding of fact:

The above-captioned cause involves two partners, both energetic, dynamic, intelligent businessmen, entrepreneurs and risk-takers. They amassed a multi-million dollar investment portfolio through a relationship which contained virtually no formal agreements or legal documents. Rather, these partners conducted their affairs through the use of informal luncheons and late-night telephone conversations. Their conduct was governed by their respective assumptions and personal financial objectives. The Court enters this background because . . . the testimony of both Dr. Sanchez and Mr. Saylor is, at best, self-serving, speculative and vague. Neither intentionally misrepresents the truth; however, both partners can only see the issues before the Court from a disturbingly myopic point of view.

{2} The two limited partnerships at issue in this lawsuit were Fidelity Limited, R.S.R.S. (RSRS), and Coors, Ltd., R.R.G. (Coors). Saylor appeals the court's determination that he converted partnership promissory notes worth $500,000 and therefore owed Sanchez $250,000. Sanchez cross-appeals the court's fee and expense reimbursement award of $351,739 in favor of Saylor and against Coors; the court's award of $522,488 in favor of Coors and against Sanchez for breaches of contract and fiduciary duty; and the court's refusal to award Sanchez damages in the form of profits derived by Saylor from Saylor's conversion of partnership notes. On the Saylor appeal, we affirm the judgment in favor of Sanchez against Saylor. On the Sanchez cross-appeal, we reverse the judgment of $522,488 in favor of Coors against Sanchez, and we affirm the judgment of $351,739 in favor of Saylor against Coors.

FACTS AND PROCEEDINGS

{3} Sanchez and his wife sued Saylor and his wife. The Saylors counterclaimed. The wives were ultimately dismissed. Neither RSRS nor Coors were named parties. Two family limited partnerships into which certain of the Sanchez assets were placed, the R & E Sanchez Third Family Limited Partnership and the R & E Sanchez Fourth Family Limited Partnership, were added as plaintiffs. We refer to Sanchez and his family limited partnerships as "Sanchez."

{4} Sanchez and Saylor were the general partners of RSRS, which was formed to purchase the Fidelity Square Shopping Center (the shopping center). RSRS sold the shopping center to Fidelity Square Limited (Fidelity-Arizona), an Arizona Limited Partnership, and received two unguaranteed promissory notes secured by a mortgage as partial consideration for the sale. Fidelity-Arizona defaulted on the notes. In a refinancing, Fidelity-Arizona received funds from Golddome Credit Corporation (Golddome), and RSRS subordinated its mortgage to a Golddome first mortgage. Fidelity-Arizona then defaulted on its obligations to RSRS and Golddome. After RSRS filed a foreclosure action, Fidelity-Arizona filed bankruptcy in Arizona.

{5} The primary issue in Sanchez's appeal arises out of Saylor's purchase on his own behalf of the shopping center out of the bankruptcy by using, as partial consideration, the release and forgiveness of the RSRS promissory notes. The court held Saylor liable in conversion.

{6} Sanchez and Saylor also were the general partners in Coors. Saylor managed this partnership, which owned commercial rental property (the Coors property). The primary issues in Saylor's appeal arise out of services rendered and funds advanced for the benefit of Coors for which Saylor felt entitled to be reimbursed or paid, and the loss by Coors of a financially beneficial refinancing opportunity due to Sanchez's refusal to provide his financial statements to the prospective lender.

{7} Interwoven into these partners' relationships were Sanchez's personal financial difficulties. Sanchez did not join Saylor in buying the shopping center out of bankruptcy, due primarily to a United New Mexico Bank (United) judgment against Sanchez for $2,364,533 and United's collection efforts which included a fraudulent-conveyance action against Sanchez. Sanchez feared that United ultimately might levy against the shopping center. This affected his relief below. The court denied Sanchez any profits derived from Saylor's conversion of the RSRS notes because of Sanchez's "own unclean hands in attempting to deceive United," and the court refused to impose a constructive trust on the shopping center in Sanchez's favor, because "to do so would ... consummate the attempt to defraud United ...."

{8} In addition, Sanchez refused to provide personal financial statements to obtain a refinancing for Coors because Sanchez feared that United would discover them and seek execution against his assets. The court found this refusal to be part of Sanchez's "ongoing efforts to deceive his creditors about his assets."

{9} Other threads of Sanchez's inappropriate conduct running through the partnership fabric are noted in findings that his "refusal to provide his personal financial statements [for the Coors refinance] was tortious, intentional, willful, and in bad faith"; that he repeatedly failed to inform himself about the affairs of Coors; that he failed and refused to contribute funds needed by Coors; and that he failed and refused to bear the risks and losses of the partnership while he demanded profits. The court concluded that this conduct constituted breaches by Sanchez of his fiduciary duties to Coors.

{10} After several days of trial, the court entered a Final Order and Judgment (the judgment). After post-judgment motions, the court entered an order joining Coors, as a defendant and counterclaimant (the order), and an amended final order and judgment (the amended judgment). With this summary backdrop, we address the issues.

DISCUSSION
I. Rule 12-213(A)(3) and Substantial Evidence Arguments

{11} Each party accuses the other of failing to adhere to Rule 12-213(A)(3) NMRA 2000, requiring an appellant to set out the substance of the evidence bearing upon a crucial proposition. We deny Saylor's motion to dismiss Sanchez's entire cross-appeal for failure to comply with that rule because the entire cross-appeal does not suffer from a failure to comply. However, as will be seen, we do decline to entertain certain issues for failure to comply with Rule 12-213(A).

{12} We reiterate the standards of review:

If there is substantial evidence to support the trial court's decision, we will not disturb that decision on appeal. Substantial evidence is such relevant evidence that a reasonable mind would find adequate to support a conclusion. In reviewing a claim that the trial court's decision was not supported by substantial evidence, the appellate court views the evidence in the light most favorable to the decision below, resolving all conflicts in the evidence in favor of that decision and disregarding evidence to the contrary. We will reverse only when the evidence, or reasonable inferences from the evidence, cannot support the trial court's findings and conclusions.

Insure New Mexico, LLC v. Robert McGonigle, 2000-NMCA-018, ¶ 8, 128 N.M. 611, 995 P.2d 1053 (internal quotation marks and citations omitted). We indulge every presumption in favor of the correctness of the findings, conclusions, and judgment of the district court. See Esquibel v. Hallmark, 92 N.M. 254, 256, 586 P.2d 1083, 1085 (1978)

. When we review a substantial evidence claim, "[t]he question is not whether substantial evidence would have supported an opposite result; it is whether [the] evidence supports the result reached." Hernandez v. Mead Foods, Inc., 104 N.M. 67, 71, 716 P.2d 645, 649 (Ct.App.1986). There may be other facts that, if believed, might support a different result, but we disregard them. See Salter v. Jameson, 105 N.M. 711, 713, 736 P.2d 989, 991 (Ct.App.1987). "It is for the trial court to weigh the testimony, determine the credibility of witnesses, reconcile inconsistent statements, and determine where the truth lies." Lopez v. Adams, 116 N.M. 757, 758, 867 P.2d 427, 428 (Ct.App.1993). "The appellate court may not reweigh the evidence [or] substitute its judgment for that of the trier of fact." Sanchez v. Homestake Mining Co., 102 N.M. 473, 476, 697 P.2d 156, 159 (Ct.App.1985) (citation omitted). If a finding is made against the party with the burden of proof, we can affirm if it was rational for the district court to disbelieve the evidence offered by that party. See Sosa v. Empire Roofing Co., 110 N.M. 614, 616, 798 P.2d 215, 217 (Ct.App.1990). Applying these standards of review in the case before us, we determine that substantial evidence supports the district court's findings of fact and conclusions of law in all instances in which lack of substantial evidence was argued by either party in this appeal.

II. Saylor's Appeal

{13} Saylor appeals from an adverse judgment holding him liable in conversion and awarding $250,000 to Sanchez. He attacks the sufficiency of the evidence and contends...

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