SANTA FE CUSTOM SHUTTERS v. Home Depot

• Decision Date: 04 March 2005
• Docket Number: No. 23, No. 203, No. 825., No. 24
• Citation: 137 N.M. 524,113 P.3d 347
• Parties: SANTA FE CUSTOM SHUTTERS & DOORS, INC., Plaintiff-Appellee/Cross-Appellant, v. HOME DEPOT U.S.A., INC., Defendant-Appellant/Cross-Appellee, and Santa Fe Custom Shutters & Doors, Inc., Plaintiff-Appellee, v. Home Depot, Inc., a Georgia corporation, Defendant-Appellant.
• Court: Court of Appeals of New Mexico

113 P.3d 347

137 N.M. 524

SANTA FE CUSTOM SHUTTERS & DOORS, INC., Plaintiff-Appellee/Cross-Appellant, v. HOME DEPOT U.S.A., INC., Defendant-Appellant/Cross-Appellee, and Santa Fe Custom Shutters & Doors, Inc., Plaintiff-Appellee, v. Home Depot, Inc., a Georgia corporation, Defendant-Appellant.

Nos. 24,203, 23,825.

Court of Appeals of New Mexico.

March 4, 2005.

Certiorari Denied May 1, 2005.

As Corrected May 24, 2005.

Larry D. Maldegen, William P. Templeman, Stephen J. Lauer, Sharon W. Horndeski, Comeau, Maldegen, Templeman & Indall, LLP, Santa Fe, NM, for Plaintiff-Appellee/Cross-Appellant.

Alice T. Lorenz, Miller, Stratvert P.A., Albuquerque, NM, Andrew S. Montgomery, Montgomery & Andrews, P.A., Santa Fe, NM, for Defendant-Appellant/Cross-Appellee.

Certiorari Denied, No. 29,125, May 1, 2005.

OPINION

ALARID, Judge.

INTRODUCTION

{1} Defendant-Appellant, Home Depot U.S.A., Inc. (Home Depot), is a foreign corporation with headquarters in Atlanta, Georgia. Plaintiff-Appellee, Santa Fe Custom Shutters and Doors, Inc. (SFCS), is a New Mexico corporation.

{2} In 1995, Julie Lubke and Martin Doobrovo began manufacturing custom shutters in Santa Fe, New Mexico. Subsequently Lubke and Doobrovo incorporated their business as SFCS. In addition to manufacturing shutters, SFCS would also deliver and install its products. In late 1995 and early 1997, SFCS entered into written "Installer Agreements" with Home Depot by which SFCS was to provide custom shutters and installation services to customers of Home Depot at its stores in Albuquerque, New Mexico.

{3} Starting in 1997, Paul Wyman, Home Depot's Divisional Install Manager for Home Depot's Southwest Division, encouraged SFCS to expand its production capacity. Wyman represented to SFCS that Home Depot would buy display samples from SFCS and place them in Home Depot stores in the Dallas/Fort Worth market. Wyman represented to SFCS that Home Depot would professionally market SFCS's products. Wyman represented to SFCS that if SFCS expanded and maintained its production capacity, he anticipated that Home Depot would forward large numbers of shutter orders to SFCS. Wyman further represented to SFCS that eventually Home Depot would market SFCS products nationwide.

{4} SFCS and Home Depot entered into an oral agreement by which SFCS would increase and maintain its production capacity and produce shutters for sale in Home Depot's stores in the Dallas/Fort Worth market. Home Depot agreed to place display samples in its stores in the Dallas/Fort Worth market and to professionally market SFCS's products to Home Depot's customers. SFCS and Home Depot did not discuss or agree on the duration of the agreement, nor did they discuss or agree upon terms governing the termination of the agreement. In mid-1998, Home Depot began to offer and display SFCS's products in some of its Dallas/Fort Worth stores.

{5} Relying on Wyman's representations, SFCS expanded its production capacity. SFCS moved into a larger facility, acquired more efficient equipment, and hired additional employees. SFCS obtained bank financing and borrowed from Lubke's and Doobrovo's retirement plans in order to finance the expansion. SFCS continued to expand its production capacity during 1999. By the end of 1999 SFCS had an annual production capacity of $1 million in gross sales. However, Home Depot did not aggressively market SFCS's products and services in its Dallas/Fort Worth stores. In 1999, SFCS sold approximately $200,000 worth of products and services through Home Depot.

{6} The relationship between SFCS and Home Depot soured. SFCS asserted that Home Depot had not lived up to its commitment to market SFCS's products and services to its customers in the Dallas/Fort Worth market. In February 2000, SFCS and Home Depot agreed to mutual commitments to improve the program and increase sales of SFCS's products and services in the Dallas/Fort Worth market. Nevertheless, on March 20, 2000, Home Depot abruptly terminated SFCS's business relationship with Home Depot stores in the Dallas/Fort Worth market. On July 17, 2000, Home Depot terminated all business relationships with SFCS.

{7} SFCS sued Home Depot. The district court conducted an eight-day bench trial. The district court determined that Home Depot was liable under four alternative theories: (1) breach of contract, (2) common-law fraud, (3) violation of the New Mexico Unfair Practices Act (UPA)¹, and (4) violation of the Texas Deceptive Trade Practices-Consumer Protection Act (DTPA).² The district court awarded SFCS $3,770,039 in compensatory damages under each theory. The district court trebled the compensatory damages awarded on the UPA and DTPA claims for an award under each statute of $11,310,117. The district court awarded $1,000,000 in punitive damages on the breach of contract claim and $1,000,000 in punitive damages on the fraud claim. Lastly, the district court awarded post-judgment interest. The district court entered a judgment awarding SFCS treble damages of $11,310,117 and post-judgment interest in the amount of $688,936, for a total award of $11,999,053.

{8} Subsequently, in a Supplemental Judgment, the district court awarded SFCS $3,045,338.58 in attorney fees and costs.

{9} Both parties appeal.

The Texas DTPA

{10} Home Depot argues that the district court erred in not dismissing SFCS's DTPA claim. We agree.

{11} Under the DTPA, only consumers have standing to bring a claim. Flenniken v. Longview Bank & Trust Co., 661 S.W.2d 705, 706 (Tex.1983). To qualify as a consumer, the plaintiff must have sought or acquired goods or services by purchase or lease, and the goods or services so acquired must form the basis of the DTPA claim. See Maginn v. Norwest Mortgage, Inc., 919 S.W.2d 164, 166 (Tex.App.1996)

. SFCS does not claim that it acquired goods from Home Depot. SFCS argues that it has standing as a consumer under the DTPA because it acquired "marketing services" from Home Depot. Where, as here, the operative facts are not in dispute,³ whether a plaintiff was a consumer in relation to a transaction is a question of law. FDIC v. Munn, 804 F.2d 860, 863 (5th Cir.1986) (applying DTPA); cf. N.M. Dep't of Labor v. A.C. Elec., Inc., 1998-NMCA-141, ¶ 8, 125 N.M. 779, 965 P.2d 363 (construing NMSA 1978, § 50-4-22 (1999)); Jicarilla Apache Nation v. Rodarte, 2004-NMSC-035, ¶ 24, 136 N.M. 630, 103 P.3d 554.

{12} In applying the DTPA, Texas courts distinguish between services that are the "objective" of a transaction and services that are merely "incidental." Maginn, 919 S.W.2d at 166. Services that are not the "end and aim" of the transaction and that serve no purpose other than facilitating the objective of the transaction are incidental as a matter of law. Id. at 167. A plaintiff's receipt of some incidental benefit from services performed by the defendant does not confer consumer status on the plaintiff if the plaintiff's objective in entering into the transaction is not the acquisition of goods or services. See id. Applying Texas law interpreting the DTPA, we hold as a matter of law that "the end and aim" of SFCS's contract with Home Depot was the receipt of payment of the purchase price of its goods and services. Marketing efforts by Home Depot directed at its own customers were incidental to SFCS's ultimate objective of obtaining payment for goods and services sold to Home Depot. "Money is not `goods' under the DTPA, and acts to acquire money are not attempts to acquire services as defined by the DTPA." Canfield v. Bank One, Tex., N.A., 51 S.W.3d 828, 839 (Tex.App. 2001). SFCS's attempt to characterize itself as a consumer is a variant of the discredited argument that because "all transactions involve human service to some extent, the cost of which is included in the price of the transaction... all `services' in any transaction are purchased services under the DTPA." Munn, 804 F.2d at 863-64 (rejecting the argument that the provision of any services in a transaction otherwise excluded from the DTPA will give rise to consumer status). Under Texas law, SFCS's relationship to the SFCS — Home Depot transaction was as a seller of goods and services whose objective was payment in money for those goods and services. As a seller, SFCS lacks standing under the DTPA.

New Mexico UPA

{13} Home Depot argues that SFCS lacks standing to bring a claim under the UPA. We agree.

{14} The Unfair Practices Act defines an "unfair or deceptive trade practice" as

any false or misleading oral or written statement, visual description or other representation of any kind knowingly made in connection with the sale ... of goods or services ... by any person in the regular course of his trade or commerce, which may, tends to or does deceive or mislead any person.

Section 57-12-2(D). As we read this provision, the UPA contemplates a plaintiff who seeks or acquires goods or services and a defendant who provides goods or services. In an effort to establish UPA standing as a purchaser of services, SFCS argues that we should treat Home Depot's activities in marketing SFCS's shutters to Home Depot's own customers as marketing services purchased by SFCS. We did not find this argument persuasive in the context of the DTPA and we do not find it persuasive in the context of the UPA.

{15} Whether Home Depot's activities in marketing SFCS's products and services to Home Depot's customers constituted a sale of services within the meaning of Section 57-12-2(D) involves both a question of statutory construction and the application of the statute as construed to the specific facts of this case. See A.C. Elec., Inc., 1998-NMCA-141, ¶ 8, 125 N.M. 779, 965 P.2d 363. Here, the historical facts are not in dispute; accordingly, we are faced with a pure question of law, subject to de novo review. Jicarilla Apache Nation, 2004-NMSC-035, ¶ 24, 136 N.M. 630, 103 P.3d 554. Although the district court purported to find that the transaction between Home Depot and SFCS involved the...